A joint venture can be a smart, strategic move. You have found a partner with the right skills, connections or resources, and together you can go further than you could alone. It is an opportunity to unlock growth quickly, but it also brings shared risk, shared control and, at times, very different expectations.
This guide is for business owners and decision makers who are exploring or already navigating a joint venture. We will walk through the key legal and commercial questions that tend to come up, helping you understand not just how joint ventures work, but where they often go wrong and how to avoid that.
If you are considering a joint venture or feel your current arrangement is not as watertight as it should be, our commercial solicitors can help you put the right structure in place and protect your position from the outset.
Click to jump to individual FAQs:
- Who can enter a joint venture agreement?
- Does a joint venture agreement need to be in writing?
- How do you structure a joint venture?
- What should be included in a joint venture agreement?
- How long does a joint venture typically last?
- Can you enter a joint venture with an overseas based company?
- Do you need a solicitor to prepare a joint venture agreement?
- Can a party transfer or sell its interest in a joint venture?
- What happens if one party wants to leave the joint venture?
- What happens if one party breaches the joint venture agreement?
- Summary
Who can enter a joint venture agreement?
Most businesses can enter into a joint venture, regardless of size or structure. Whether you are running a growing SME, leading a scale-up, or managing an established company, the law doesn’t restrict who can collaborate in this way.
What matters more is whether each party has the authority to enter into the agreement and whether the arrangement aligns commercially. In practice, joint ventures often happen when two businesses bring something different to the table. One might have the product, the other the distribution network. One might have capital, the other technical expertise.
The opportunity is usually obvious. The challenge is making sure both parties are aligned on what success looks like, because that’s where issues tend to emerge later.
Does a joint venture agreement need to be in writing?
Legally, a joint venture doesn’t have to be in writing to exist. But relying on a verbal or loosely documented arrangement is risky. Without a written agreement, you are left piecing together what was agreed if something goes wrong. That often leads to disputes about roles, responsibilities, or profit sharing, and those disputes are rarely straightforward to resolve.
A written agreement gives structure to the relationship. It forces both parties to think through the practical realities of working together, not just the opportunity at hand. It also creates a clear reference point if expectations start to drift.
In short, while it’s not strictly required under English law, a written joint venture agreement is a good idea if you want certainty and control. For more information on this topic read our guide on verbal agreements.
How do you structure a joint venture?
There are two main approaches, and choosing between them is less about legal preference and more about how you want the relationship to operate day-to-day.
A contractual joint venture keeps things relatively simple. Each business remains separate, and the relationship is governed by a contract. This works well where the collaboration is limited in scope or duration.
A corporate joint venture involves setting up a new company that both parties own and control. This creates a more formal structure, often with clearer governance and accountability, but also more administrative complexity.
The decision usually comes down to how integrated the relationship needs to be. If you are sharing resources, employees, or intellectual property on a long term basis, a corporate structure often makes more sense. If you are testing a commercial opportunity, a contractual arrangement may be enough.
What should be included in a joint venture agreement?
A joint venture agreement should do more than outline the commercial deal. It needs to anticipate how the relationship will function under pressure, when priorities shift, performance dips, or disagreements arise.
You should be clear on what each party is contributing and what they expect in return. This includes financial investment, profit-sharing, operational responsibilities, intellectual property ownership and decision making authority. Equally important, the agreement should set out what happens if things don’t go to plan, how deadlocks are resolved, how disputes are handled, how parties can exit, and how the joint venture can ultimately be brought to an end.
It’s often helpful to think of the agreement as a framework for managing uncertainty, not just documenting intent. If it only reflects the “best case scenario”, it’s unlikely to hold up when challenges emerge.
How long does a joint venture typically last?
There is no standard timeframe. Some joint ventures are designed for a single project, while others become long term strategic partnerships. What is important is that the agreement reflects the intended lifespan and includes a clear mechanism for ending the arrangement. That might be a fixed term, a milestone based endpoint, or an ongoing arrangement with termination rights.
Interestingly, one of the most common issues we see is that businesses don’t properly plan for the end at the beginning. It feels counterintuitive when everything is positive and forward looking, but having a clear exit route in place can prevent significant disruption later on.
Can you enter a joint venture with an overseas based company?
For many businesses, joint ventures are a practical way to expand internationally without committing to a full overseas presence. That said, cross border arrangements introduce additional layers of complexity. You will need to consider which country’s laws apply, how disputes will be resolved, and what regulatory or tax obligations arise in each jurisdiction.
These are not just technical details; they can have a real impact on how enforceable your agreement is and how easily you can protect your position if something goes wrong. Taking advice early on can help you avoid structuring issues that are difficult (and expensive) to unwind later.
Do you need a solicitor to prepare a joint venture agreement?
You are not legally required to use a commercial solicitor, but joint ventures are rarely straightforward. They often involve multiple areas of law, from contract and corporate structuring to intellectual property and employment considerations. On top of that, there’s the commercial reality, balancing risk, control, and flexibility in a way that works for both parties.
A commercial solicitor helps you navigate those moving parts. Not just by drafting the agreement, but by challenging assumptions, identifying risks, and ensuring the structure reflects how the arrangement will actually operate.
For many businesses, that input makes the difference between a joint venture that supports growth and one that creates ongoing friction.
Can a party transfer or sell its interest in a joint venture?
Whether a party can transfer their interest depends entirely on the agreement. Most joint ventures include restrictions to prevent one party from introducing a new partner without consent. That is because the success of the arrangement often depends on trust and alignment between the original parties.
If transfers are allowed, they are usually subject to conditions, such as giving the other party the option to buy the interest first. Without those protections, you could find yourself working with someone you didn’t choose, and who may not share the same objectives.
What happens if one party wants to leave the joint venture?
This is where the strength of your agreement is really tested. A well drafted joint venture agreement will set out a clear process for exit. That typically includes how notice is given, how the departing party’s interest is valued, and whether the remaining party has the option to buy them out.
If these points aren’t addressed properly, exits can become contentious. Disagreements over valuation or timing can stall the business and damage the underlying relationship. Planning for exit at the outset might feel premature, but it’s one of the most effective ways to protect continuity if circumstances change.
What happens if one party breaches the joint venture agreement?
If a party breaches the agreement, the response will depend on the terms that have been agreed. In many cases, there will be a process that allows the breaching party to put things right within a specified timeframe. If the breach is serious or not remedied, it may give the other party the right to terminate the arrangement or seek financial compensation.
Disputes can escalate quickly if the agreement isn’t clear on how breaches are handled. That’s why dispute resolution provisions, whether through negotiation, mediation, or formal proceedings, are an important part of the overall structure. If you are currently in a dispute and you would like to understand your options, read our guide on joint venture disputes.
Summary
Joint ventures can be a powerful way to grow your business. They allow you to share risk, access new opportunities, and combine strengths in a way that wouldn’t be possible alone.
But they also require careful planning. The more aligned and clearly defined the relationship is at the outset, the more likely it is to succeed.
In practice, the difference between a joint venture that delivers value and one that creates problems usually comes down to the quality of the agreement behind it.
