Joint Ventures

A joint venture is a legal organization that takes the form of a short-term partnership in which people jointly undertake a transaction for mutual profit. Generally, each person contributes assets and shares risks. As in a partnership, a joint venture may involve any type of business transaction, and the "people" involved may be individuals, groups of individuals, companies or corporations.

Joint ventures are widely used by companies to gain entrance into foreign markets. Foreign companies form joint ventures with domestic companies and bring new technology and business practices into the joint venture, while the domestic companies already have the relationships and requisite governmental documents within the country along with being entrenched in the domestic industry.

In the U.S., joint ventures are governed by state partnership, contracts and commercial transactions law. A joint venture is treated like a partnership for federal income tax purposes. A joint venture corporation involves the same type of activity as above but within a corporate framework. Foreign joint ventures are subject to the international trade laws and the laws within the foreign countries.

Last updated: Sept 30, 2008

The content on this page was developed in partnership with the Legal Information Institute, Cornell Law School.