A joint venture or JV as they are commonly referred to is typically an unincorporated contractual association between two or more parties.
However, the term is often used more generically to refer to any kind of special purpose business association between two or more persons.
Some alternatives to the unincorporated joint venture (UJV) structure include incorporated joint ventures (i.e. setting up a company in which the "co-venturers" have shareholdings in proportion to their JV interests), unit trusts (where the respective unitholdings represent the co-venturers' respective interests) and even partnerships.
The common element is usually the existence of an overriding contractual management structure (whether it is, in the caes of an UJV the Joint Venture Agreement (JVA), a Unitholders Agreement in the case a a unit trust style JV or a shareholders agreement in the case of an incorporated JV.
All the above is probably a bit technical, but the key point to understand is that there is more than one way to structure a joint investment in a business, property or other assets.
So what exactly is a UJV? There really isn't a one size fits all definition. But the High Court has tried to describe a UJV (in United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 per Mason, Brennan and Deane JJ at page 10) as follows:
“The term “joint venture” is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing, money, property or skill. Such a joint venture (or under Scots’ law, “adventure”) will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried on through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a “joint venture” and what should more probably be seen as more than a simple contractual relationship may on occasion be blurred. Thus, where one party contributes only money or other property, it may sometimes be difficult to determine whether a relationship is a joint venture in which both parties are entitled to a share of profits or a simple contract of loan or a lease under which the interest or rent payable to the party providing the money or property is determined by reference to profits made by the other”.
From that we can discern some key features of a JV:
JVs are typically not a passive investment. Generally the parties need to contribute skills as well as money.
JVs are typically for a single business, development or project rather than a long term relationship between the co-venturers.
JVs usually are not the major activity of the parties concerned. If they're individuals they'll have day jobs. In the business word they'll have a core business to which the JV is an adjunct typically. The JV is a collaborative extension of their commercial activities.
the association between the participants is almost invariably regulated by a written agreement called a Joint Venture Agreement (JVA).
These characteristics will be present in all joint venture relationships regardless of the structure the parties adopt.
So what does all that mean for you as an individual investor planning to team up with friends or family for a joint development project or business venture?
Namely that there's many ways you can structure your relationship but you WILL need legal advice to make sure the legal elements accurately reflect the commercial DEAL you've agreed.
We could write lots on the topic of JVs (and we're planning to) but hopefully this will give you some insight into what that seminar guru is talking about when they suggest you just "JV" your next deal.