What Differentiates a Joint Venture Agreement from a Partnership Deed?

A joint venture is a contractual agreement that joins together, two or more parties for the purpose of executing a particular business. In joint ventures, all parties agree to share the profit and loss of the enterprise. A joint venture is also an association of two or more persons formed to carry out a single business enterprise for profit in which they combine their property, money, efforts, skill, and knowledge.

The contributions of the respective parties may not be equal, however, there must be some contribution by each party to promotes the enterprise. A joint adventure is not created by operation of law. The existence of a joint venture gives rise to a fiduciary or confidential relationship. The existence of a joint venture is a question of fact that has to be decided according to the facts and circumstances of each case. The elements of a joint venture include:

•  A community of interest in the performance of a common purpose;
• Joint control or right of control;
• A joint proprietary interest in the subject matter;
• A right to share in the profits;
• A duty to share in the losses which may be sustained.

Partnership on the other hand is an association of two or more persons to carry on as co-owners of a single business enterprise for profit. Generally, there exists no essential difference between a joint venture and a partnership. It can be seen that a joint venture is considered as a form of partnership. However, a joint venture and a partnership are two separate entities, different from each other because:

• A joint venture can be two or more companies joining together in business, but in a partnership, it is individuals who join together for a combined venture.
• A partnership will last for many years so long the parties involved have no differences. While a joint venture company will last for only a limited period until their goal is achieved.
• The members in a partnership can claim a capital cost allowance as per the partnership rules. Whereas, joint ventures can use as much or as little of the capital cost allowance.

In a partnership, members cannot act according to their wishes because they do not have any individual identity but a member of a joint venture can retain the identity of his/her firm or property.

• A joint venture is a contractual arrangement between two companies that aims to undertake a specific task. Whereas, a partnership involves an agreement between two parties wherein they agree to share the profits as well as any loss incurred.
• In partnership, the parties are co-owners of the business and their aim is making a profit. In a joint venture, it is not just profit that binds the parties together. Joint ventures can be formed for specific purposes like research and development which will be expensive in nature andimpossible to take the same individually.
• A joint venture is generally considered to be a partnership for a single transaction. It is a less formal relationship than a partnership.
• The rights and liabilities of joint ventures are governed by the principles applicable to partnerships.
• Joint venture is generally more limited in scope and duration and the parties can be held jointly and severally liable for each other’s wrongful acts, but it must have the elements of a partnership. If a criminal act is committed through a partnership, the culpable members of the partnership are held criminally responsible, rather than the partnership itself.