Joint Venture Agreements (usually for mining and exploration projects) and Joint Operating Agreements (usually for oil and gas projects) are written contracts between two or more parties to a venture.
The parties do not establish a new company together, rather they form a joint venture ‘relationship’. This is a contractual relationship between the parties, which governs the rights and obligations of each party, their relevant shares in the joint venture, dispute resolution arrangements and shares the costs and rewards of the joint venture according to pre-agreed formulae.
A well written agreement can save significant cost and distress. There is no substitute for thorough negotiation of all contingencies before any contract is drafted.
The best way to avoid expensive legal disputes between joint venture or joint operating parties, is by ensuring that the written agreement between you covers as many scenarios as possible. This is not the time or place for ambiguity. All parties to the agreement should be able to understand and articulate their various rights and obligations without the need for legal advice.
Spending the money to have the business deal between you negotiated and documented properly can save a lot of time and money in the future.