by:  Mark A. Cobb

In an earlier blog article entitled Joint Venture Contracting in Georgia (Part I), we discussed the advantages and disadvantages of entering into joint venture agreements on Georgia construction projects.  In this article, we discuss some of the key issues involving operational aspects which every joint venturer should consider prior to putting together their JV Agreement.

Joint Venture Agreements Need to be in Writing:

We’ll start with the easiest issue; every joint venturer contract needs to be in writing and signed by the parties; both the AIA construction forms and ConsensusDocs offer agreements which can be used; in addition, construction lawyers and contract lawyers can also customize contract for your specific project or your specific industry.

Key Issue Regarding Operational Aspects:

Every contract to joint venture should include detailed and specific terms regarding the scope of the agreement, the division of labor and services on the project, and payment.  The operational issues of the contract are vital and agreement will help make a project successful.  Some of typical issues include the following:

• proper identification of all of the joint venturers (determine the number of joint ventures and their legal status)
• most parties to joint venture agreements focus on the construction stage; do not forget, however, that your agreement needs to address the bidding/proposal and the contract award stage as well;
• every agreement should be limited in its scope; for example, the agreement is likely limited to one particular project, and the agreement needs to specify this;
• typically, joint venturers are jointly responsible for the performance of the work; if there are exceptions to this, it needs to be addressed; similarly, if there are certain function which are allocated to particular member(s) of the agreement, then you should also address the related financial consequences of their performance;
• the joint venture agreement needs to specifically incorporate the written agreement between the JV and the project owner or developer;
• payment issues include how the parties will submit bills to the Joint Venture and how the Joint Venture will, in turn, submit bills to the Owner;
• The agreement should contemplate payments by the joint venture to third parties;
• Reimbursable costs to the parties to the joint venture need to be identified and addressed;

In future blog posts we plan to address other issues related to joint venture agreement including a discussion of internal management issues and risk allocation issues.  In the meantime, if you have any questions regarding joint venture agreement in Georgia, Georgia lien or payment bond questions, construction contracting or any thing else related to construction law, please feel free to contact our Georgia construction law attorneys by clicking here.

If addition to our previous installment on joint contracting in Georgia (see above for link), if you would like to read our latest installment of this important topic covering joint venture management issues, please click here.  And, if you would like to read our installment discussing risk allocation in joint venture agreements in Georgia, please click here. Our final installmen on defaults to a joint venture agreement and the corresponding remedies may read if you click here.

If you have other terms or key operational issues which you would like to see discussed (or have any comments on this article), please leave a comment below: