A joint venture in international trade is a strategic alliance between two or more companies. It can be used for several activities like production, distribution etc. The demand for this type of trade has always been pressing. This has been a top priority for almost more than 60% of the trade promotion organizations.
The first kind is the Incorporated Joint Venture Contract, which is established for carrying out a common activity. This is achieved by creating a company in a specific country. It also accompanies articles of incorporation of company, shareholders' agreement and so on.
Now there can be two motives for a joint venture. It may be about the joint performance of one single-activity or it can be for long term cooperation between parties. Two types of joint ventures in international trade are common:
- For creating a company
- For cooperation without creating a company.
The second one regulates cooperation between parties. It is termed as Contractual Joint Venture Contract. It necessitates the formulation of the important contractual joint venture agreement. This is suitable for venture aimed at transportation, hotels, tourism etc.
A joint venture in international trade has two models for joint venture agreements. The contracts are basically targeted at the enterprises in emerging economies and developing markets. The requirements of civil and common law legal systems as well as the specifications of the fields of the business are also taken into account. To make it fool-proof, the guidelines and the textual matter of the contract have been reviewed by experts from various fields.
The agreements involved also see to the initial and additional contributions of the parties coming into contract, their external and internal liabilities, deadlock resolutions, dispute resolution, exclusion of a partner, sharing of profits and losses, end of joint venture and others.
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