Issue Date: 
Monday, January 19, 2015

10 features of a good Joint Venture Agreement

By W van Rooyen

www.how2tender.com

19 January 2015

A Joint Venture is a good business idea to compete for tenders if one does not have all the necessary expertise that are required for a specific tender. The thing to remember though is that you must have a solid Joint Venture Agreement in place for your Joint Venture. A good, rock solid Joint Venture Agreement will protect the participants to the Joint Venture.

Here are 10 features that any good Joint Venture Agreement must have:

  1. The purpose of the joint venture must be clearly defined;
  2. The percentage participation of all the members must be clearly stated. Remember that the members share in the profits and losses of the Joint Venture and this must be indicated as such.
  3. There must be a paragraph that provides for the formation of a management body for the joint venture;
  4. There must be consensus between the members to ensure that the activities of the Joint Venture will not be unjustifiably slowed down by failure to achieve it;
  5. The dispute resolution must be effective, easy and cheap to execute;
  6. There must be clear and comprehensive guidelines that sets out the contributions to be made by each member towards the activities of the joint venture in securing and executing the contract and should allocate monetary values to such contributions.
  7. All members must provide meaningful input to the management activities of the joint venture as well as policy making;
  8. There must be a safe guard to limit, as far as possible, any losses to the joint venture by the default of any Joint Venture member;
  9. The Joint Venture Agreement must be flexible enough to allow for joint ventures which differ in objectives, inputs by members and management systems;
  10. Last but not least the Joint Venture Agreement must be tender specific.

Make sure that your Joint Venture Agreement contains all these features. This will ensure that you are covered against most unforeseen contingencies.

You can find a Joint Venture Agreement on our website at www.how2tender.com. You will also find our newly revised Tender Manual 2015 there. The Tender Manual will teach you all you need to know to respond to tenders correctly and hopefully successfully.

Until next time - happy tendering.

When Must I Sub-Contract?

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting. The Draft Preferential Procurement Regulations, have been gazetted and are currently up for review. However, these Regulations are the major cause for the confusion. Many entrepreneurs ask whether they should sub-contract or not whilst responding to a tender.

The Draft Preferential Procurement Regulations stipulates the following: 

  1. For contracts above R30 million, the tenderer MUST sub-contract a minimum of 30% of the value of the... Read More
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