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Joint ventures
Joint ventures are generally created by agreement (a joint venture agreement) between two or more organisations to participate in a project or undertaking together.
A joint venture agreement is a legally binding agreement that is enforceable like any other contract, so it should be carefully drafted and customised to set out the terms of the joint venture clearly
Note
Before reading further, see our guide to working with other organisations.
Our fact sheet has further information about joint ventures including:
- what is a joint venture?
- when a joint venture is appropriate, and
- your organisation's obligations under a joint venture agreement
Partnerships
Partnerships are regulated separately by each state and territory in Australia, and each jusridiction has its own laws. The laws are similar, but there are a few differences.
A partnership is defined by each state's legislation as the relationship which exists between persons carrying on a business in common with a view to profit.
Partnerships for not-for-profit organisations are different to joint ventures, because generally the partners are jointly and severally responsible and liable for the partnership's activities. This means that one partner could be responsible and liable for all of the partnership’s activities alone if other partners are unable to pay.
There are certain rules about interests and duties of partners, which are set out in the state-based legislation.
There are three main types of partnerships - general, limited and limited liability.
- General partnerships are where all the partners are equally responsible for the operations and management of the partnership and each partner could be responsible and liable for all of the partnership’s activities alone if other partners are unable to pay.
- Limited partnerships have two types of partners - general partners and limited partners. A general partner is described above and has more responsibility and liability compared to a limited partner that will only be liable to the amount of agreed contribution to the partnership.
- Limited liability partnerships are normally used for larger professional service businesses and are generally not suitable for not-for-profit organisations.
If two or more organisations are considering partnering for a project, it's a good idea to enter into a formal partnership agreement that clearly sets out the terms of the partnership. You will need the assistance of a lawyer to draft a partnership agreement.
A partnership agreement will normally include the following:
- the names of the partners
- the obligations and liabilities of the partners to contribute to money, assets and any project costs of the partnership
- how distribution of donations or assets will be managed
- how decisions of the partners will be made
- the management and administration of the partnership including annual meetings
- any powers delegated to committees and the responsibilities of those committees
- how the partners will resolve disputes
- restrictions on the sale of a partnership interest, and
- the duration of the partnership and termination of the partnership
Partners owe each other the duties and obligations described in the partnership agreement, however they are also expected to exercise their rights and powers in good faith to benefit the partnership.
General obligations towards other partners may not be as obvious as those included in the partnership agreement. These obligations can arise from common law and the special nature of the partner relationship. Additional duties include a duty to act for the common good – a partner should not put themselves in a position of conflict without their partner's consent (ie. enter into business in competition to the partnership).
More information
NCOSS - Formalising Partnerships Resource Kit This kit is designed to be used by small to medium organisations in a workshop context with other organisations, or within their own organisations (for example, in discussion between the management committee and staff) to resource a step by step planning process to form a partnership.
VicHealth - Partnerships analysis tool While the focus of this resource is on the health sector the general principles of the tool applies across sectors.
The content on this webpage was last updated in December 2023 and is not legal advice. See full disclaimer and copyright notice.
