4 Key Differences Between a Partnership and a Joint Venture

You say partnership, I say joint venture. Let’s not call the whole thing off, but let’s do clarify whether they are two sides of the same coin or are actually different things. For those of you playing along at home, the answer is they are different, but not by much. Let me explain.

On the face of it, a partnership and a joint venture would seem to be the same thing. Both involve more than one party getting together for purpose of undertaking business or some other project. However, this is where their two roads diverge. Here are the key differences:

1) Who is in it

A partnership is usually only made up of persons, two or more, who form a

legally recognized association for the purpose of operating a business. A joint venture, on the other hand, can be individuals or entities such as corporations, or even governments and businesses. It can also be individuals, whereas a partnership is often only individuals.

2) The purpose

This is perhaps where partnerships and joint ventures are the most different. A partnership’s purpose is not limited to a single project or goal; rather, it is oriented towards running a business or long-term enterprise and making a profit. Joint ventures, on the other hand, are designed to accomplish a specific goal. Profit may not be on the list of goals of the joint venture at all. For example, universities and drug companies often enter into joint ventures to find new drugs.

3) How each is made

Partnerships are usually formed with a partnership agreement or contract between the individuals who make up the partnership. The partnership agreement lays out the terms of the partnership covering topics such as sharing in profits and losses, how partners can leave the partnership, percentage of control held by each partner, and similar issues. Joint ventures, on the other hand, may not necessarily have an agreement in place at all. Or, if there is an agreement, it is a short-term and very specific contract that addresses the particular project that is going to be undertaken.

4) How long each lasts

Partnerships are designed to last for the life of the business. They can run infinitely. In contrast, joint ventures are meant for short-term project lifetimes. They are not meant to last forever, just long enough to allow the parties to reach the particular goal.

Are you contemplating entering into a partnership or a joint venture? Consulting with competent and experienced legal counsel is a must whether you are thinking about joining a partnership or a joint venture. Consider scheduling a consultation with the Trembly Law Firm today to get the help you need making this kind of big decision.