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How to write your Joint Business Entity Agreement
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Use cases for this template
Aurora BioTech and Summit Logistics form a limited liability company to enter the Asia-Pacific market
The Challenge
Aurora BioTech needed a joint venture partner with distribution strength to launch a new diagnostics line, and Summit Logistics wanted to diversify; both agreed to form a separate legal entity with an Agent holding the business interest, but they struggled to align decision-making processes, ownership percentages, profit distribution, and confidentiality while preparing for foreign regulations and tax implications across countries.
The Solution
They used the Joint Business Formation Agreement to establish the contractual relationship, define capital contributions, limit joint liability, and set dispute resolution and governance terms, then turned to Proposal Kit to create supporting materials: an executive proposal to investors, a market research report, a governance charter with voting rights and key decisions, and a risk register that mapped potential conflicts and legal or financial issues.
The Implementation
With Proposal Kit's document assembly, they produced a rollout plan and compliance checklist tailored to the new legal entity; the AI Writer generated a country-by-country regulatory summary and an operations plan for day-to-day activities, while automated line-item quoting built a pro forma budget for equipment, freight, and service contracts to support board approval.
The Outcome
The partners launched on schedule, the Agent opened bank and tax accounts in the JV's own name, monthly cash distributions followed clear terms, and mediation provisions resolved the first pricing disagreement before it escalated, allowing the firm to win new customers without costly litigation.
BlueHarbor Robotics and Valeon Foods combine know-how for a smart-packaging project
The Challenge
Two parties with different management styles wanted to pursue a specific project but needed a clear management structure, confidentiality rules for intellectual property, and protection of personal assets; one partner also worried about unlimited liability and unclear responsibility for production downtime.
The Solution
They executed the formation agreement with an Agent to form a new entity and addressed profits and losses, authority limits, and indemnification; Proposal Kit then supported the JV by producing a technical feasibility study, a shareholders agreement outline for directors and representatives, and a service-level playbook that set escalation and arbitration options.
The Implementation
Using Proposal Kit's templates, the team assembled standard operating procedures, an IP exchange protocol, and a quarterly reporting format; the AI Writer drafted a pilot trial plan and vendor evaluation matrix, while line-item quoting detailed unit economics, maintenance schedules, and funding tranches tied to milestones.
The Outcome
The JV met its first production objectives, avoided downtime penalties through pre-agreed management decisions, and captured a regional grocery chain as a flagship account, with transparent taxation and annual reports keeping shareholders aligned for long-term expansion.
TerraGrid Energy teams with Nimbus Analytics to develop microgrids for a municipal consortium
The Challenge
Faced with complex procurement rules and multiple stakeholders, the partners needed a single business entity to pool resources and investment while insulating individual partners from joint liability; they also required clear processes for decision making, dispute resolution, and exit strategies if the pilot failed.
The Solution
They used the contract to formalize contributions, Agent authority, and cash distribution mechanics, and relied on the Proposal Kit for the surrounding documents: a stakeholder engagement proposal, a compliance plan aligning with government regulations, and a mediation-first dispute handbook that laid out steps before arbitration.
The Implementation
Proposal Kit's document assembly produced an implementation roadmap and safety governance manual; the AI Writer created a community impact study and a data-sharing policy, and automated line-item quoting mapped equipment, installation, research, and operations costs to funding sources to support council review.
The Outcome
The JV secured approval, executed the first neighborhood microgrid on time, and resolved a metering disagreement with the utility through the agreed process, demonstrating the advantages of careful planning and a well-documented collaboration.
Abstract
This agreement creates a contractual joint venture among two or more parties labeled Developers, Customer, and an Agent. Its purpose is to form a separate legal entity to acquire and hold its shared ownership interests and to provide funding for that specific project. The Agent is authorized to establish the new entity, often a limited liability company or corporation, and hold the business interest in its own name for the benefit of the parties involved. This business arrangement defines a clear legal structure so the enterprise operates as a separate entity rather than a sole proprietorship, helping provide liability protection and a coherent business structure for day-to-day operations.
The agreement addresses capital contributions, formation documents, and profit distribution. Financial contributions are pooled to pursue specific goals, with profit share and losses allocated under rules set in exhibits. Net profits are calculated under defined provisions and paid as cash distributions according to ownership percentages.
The parties cannot bind each other to third-party obligations, limiting joint liability and helping protect personal assets. The Agent receives no compensation unless agreed and is responsible for actions taken in bad faith. The parties expect to pay taxes consistent with the entity's tax treatment; joint profits and losses are tied to fiscal-year tax obligations and tax implications.
Governance and risk controls are built in. Confidentiality safeguards intellectual property and know-how through strict non-disclosure of Specifications and related documents. Indemnification, a one-year claim limit, and attorneys' fees provisions help manage potential disputes and reduce costly litigation.
Governing law and venue clauses specify which court will govern legal disputes. Termination occurs upon project completion and final distributions or by mutual agreement, supporting practical exit strategies and dissolution.
Use cases include small businesses and large companies forming joint venture partnerships to enter a new market, combine technology and equipment for development or production, or collaborate on service contracts for a particular project or specific task. Participants can pool resources and expertise, maintain control through agreed authority, and set key decisions in governance documents, such as voting rights or majority vote rules, if the parties choose to include them.
Proposal Kit helps organizations assemble these materials with an extensive template library. Its document assembly, automated line-item quoting, and AI Writer can streamline the writing of related plans and supporting documents, helping teams stay prepared and focused on project success.
Beyond the basics, forming a joint venture is a first step toward a separate business entity that aligns two parties or more around a shared goal and clear terms. Partners can structure a new legal entity as a limited liability partnership, LLC, or corporation to avoid unlimited liability and define responsibility for a new project. Large and small companies alike use this contractual relationship to expand into foreign markets, engage new customers, and combine knowledge, equipment, and investment. For example, one partner may contribute technology while the other party brings distribution, allowing the single business entity to accomplish objectives neither could achieve alone.
Careful planning of governance is important. A shareholders' agreement or partnership agreement can define the management structure, directors, representatives, management decisions, decision-making processes, and how individual partners vote. These documents also address annual reports, taxation, and compliance with government regulations across countries, which helps avoid legal or financial issues. To reduce potential risks and conflicts, the parties should discuss the nature and extent of each contribution, expected profit share, and the process to resolve disagreements.
Dispute resolution mechanisms such as mediation, arbitration, or negotiated outcomes provide advantages over litigation by keeping the collaboration focused on long-term aims. These provisions help resolve conflicts if one party fails to perform, if management styles clash, or if partners must adapt to market forces. Research into industry factors and two types of entity/tax treatment options can inform the intended organization and its establishment, ensuring plans are addressed before the JV engages the world.
Proposal Kit supports forming a joint venture by helping teams write formation documents and related agreements with its template library and document assembly. Its AI Writer can help build supporting documents, such as governance outlines and dispute resolution clauses, and automated line-item quoting can organize budgets and investment plans, so partners can negotiate with greater clarity and proceed with confidence.
Another dimension is selecting the right joint venture partner. An established firm may contribute brand, compliance capacity, and financing, while a newer company may add speed and novel technology; aligning these strengths around a common goal is crucial. Define whether the alliance targets a narrow instance (one market launch) or a broader scope (multi-country rollout), and set a clear focus for milestones, KPIs, and reporting cadences.
Members should agree on how decisions escalate, who chairs steering meetings, and what triggers re-forecasting or cash calls. Consideration should also cover data and IP exchange rules, onboarding processes for combining teams, and vendor access so operations can start on day one.
Practical governance details reduce friction. Set signatory limits, dual-approval for expenditures, and standardized change requests to manage scope. Establish risk registers and communication plans to prevent surprises.
Decide how the JV engages the market under each firm's brand guidelines, and how customer feedback loops inform product iterations. For cross-border work, align compliance playbooks so product claims, labeling, and privacy practices are consistent. In all cases, clarity on who speaks to regulators, how audit trails are maintained, and how lessons learned are captured for future projects helps the organization move faster while staying coordinated.
Proposal Kit can support these steps with templates and document assembly that structure partner selection criteria, governance charters, and operating checklists, helping teams translate strategy into executable documents with less rework.
How to write my Joint Business Entity Agreement document - The Narrative
JOINT BUSINESS FORMATION AGREEMENT
THIS AGREEMENT is made this Current Day day of Current Month, Current Year by and between Company Name ("Developers"), Agent ("Agent") and Company Name ("Customer").
General Provisions
Business Purpose: Insert the General Summary of this Joint Business Venture. Business Scope: Insert the General Scope of Activities covered by the Joint Venture Agreement. Developers desire to enter into this Joint Venture Agreement with Customer pursuant to the terms and conditions set forth in Exhibit B attached hereto (the "Specifications").
"Joint Venturers" shall mean all parties ("the parties") listed above who are participating in the Joint Venture Agreement and their respective assignees and agents. "Business Interest" shall mean the ownership in the business entity created to facilitate the ownership in the Joint Venture under this Agreement. "Sales Activity" shall mean all gross sales that occur because of, or arising out of Affiliates made on behalf of this Joint Venture Agreement.
"Affiliate" shall mean any person or entity that conducts sales activity on behalf of one of the parties and is paid directly by one of the parties. "Joint Profits" shall mean income derived out of this Joint Venture Agreement, pursuant to the terms of Exhibit A, that pertains to Federal or State income tax purposes as determined by the fiscal year the income was derived in. "Joint Loss" shall mean any loss incurred by the Joint Business Venture, pursuant to the terms of Exhibit A, that pertains to Federal or State income tax purposes as determined by the fiscal year the income was derived in. "Capital Contribution" shall mean a contribution by one or more of the parties in cash, property or any additional capital contribution made on behalf of this Joint Venture Agreement.
"Bad Faith" shall mean a malicious motive or an action taken on the part of one or more of the parties to this Agreement. "Final Net Profits" shall mean the remaining cash distribution owed to the parties subject to their respective distribution allotment.
In consideration of the mutual covenants set forth in this Agreement, Customer and Developers hereby agree as follows:
Purpose of Joint Venture Formation
The purpose of this Joint Business Formation Agreement is to form a business entity to acquire and hold the business interests of both parties in common and to provide the capital and finances required for its acquisition. Pursuant to the terms and conditions set forth in this Joint Business Formation Agreement, each party listed shall own a portion of the new business entity, as outlined in Sec.
Contributions
The Joint Venturers shall appoint an agent, who shall also be a party to this Agreement and will hold each portion of the business interest for the benefit of each of the Joint Venturers, of which the Agent is a part.
Contributions
The Agent certifies that it has received the following contributions from each of the Joint Venturers:
Acquisition of Business Interest. The Agent is authorized to form the following business entity, business entity name and type here - e.g. "S" Corporation, "C" Corporation, LLC, etc. and to hold in their name, but on behalf of the Joint Venturers, the business interest. Agent shall be authorized by the Joint Venturers to pay a sum of amount for the formation of the business entity.
Profits from Business Entity
The Agent shall hold and distribute any and all net profits, as defined in Sec. 5, from the Joint Venture for the term of this Agreement and as long as the Joint Venturers are the owners in common of the business interest, and for the benefit of the Joint Venturers as follows:
Net Profit Calculations and Determination
All net profit calculations and determination of disbursements shall be subject to the following:
Insert how profits shall be calculated and which expenses are legitimate in determining such. Agent shall pay net profits, unless specified otherwise, as cash distributions subject to the distribution percentage allocated in Sec.
Liability of Parties
Developer shall have no ability to specifically act for or to bind Customer individually to a legal obligation, debt or third-party agreement. Customer shall have no ability to specifically act for or to bind Developers individually to a legal obligation, debt or third-party agreement. Agent shall be liable for any and all actions taken by Agent that are considered to be taken in "bad faith" or through willful misfeasance.
No person, business or entity other than the Joint Venturers shall have rights whatsoever under this Joint Business Venture Agreement.
Agent Compensation
Unless otherwise agreed upon in writing, Agent shall receive no monetary compensation for any and all services rendered by the Agent under this Agreement.
Term of Agreement
The Term of the Agreement shall commence on the date of this Agreement and shall terminate upon the following events: (1) the distribution of any final net profits accrued under the business interest; or (2) a mutually agreed termination of this Agreement by all parties to this Agreement.
Confidentiality
All parties acknowledge and agree that any Specifications and all other documents and information related to the Joint Venture and business interest (the "Confidential Information") will constitute valuable trade secrets. All parties shall keep the Confidential Information in strict confidence and shall not, at any time during or after the term of this Agreement, without prior written consent of all parties, disclose or otherwise make available to anyone, either directly or indirectly, all or any part of the Confidential Information.
General Provisions
1 Entire Agreement
This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes any and all prior agreements or understandings, written or oral, between the parties relating to the subject matter hereof. No modification of this Agreement shall be valid unless made in writing and signed by both parties hereto.
2 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of State. Exclusive jurisdiction and venue shall be in the County County, State Superior Court.
3 Binding Effect
This Agreement shall be binding upon and inure to the benefit of Joint Venturers and their respective successors and assigns. No party may assign any of their obligations under this Agreement without prior written consent by the Joint Venturers.
4 Waiver
The waiver by either party of any breach or failure to enforce any of the terms and conditions of this Agreement at any time shall not in any way affect, limit, or waive such party's right thereafter to enforce and compel strict compliance with every term and condition of this Agreement.
5 Good Faith
Each party represents and warrants to the other that such party has acted in good faith, and agrees to continue to so act, in the negotiation, execution, delivery, performance, and any termination of this Agreement.
6 No Right to Assign
Customer has no right to assign, sell, modify or otherwise alter the insert description of what is being developed, except upon the express written advance approval of Developers, whose consent can be withheld for any reason.
7 Indemnification
All parties agree to indemnify and hold harmless all parties to this Agreement from any and all claims for damages, direct or indirect, and agrees that its sole and exclusive remedy for damages (either in contract or tort) is the return of the profits paid as set forth in Sec. No action, regardless of form, arising out of any claimed breach of this Agreement or transactions under this Agreement may be brought by either party more than one (1) year after the cause of action has occurred.
8 Attorney's Fees
In the event any party to this Agreement employs an attorney to enforce any of the terms of the Agreement, the prevailing party shall be entitled to recover its actual attorney's fees and costs, including expert witness fees.
All parties represent and warrant that, on the date first written above, they are authorized to enter into this Agreement in its entirety and duly bind their respective principals by their signatures below:
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Frequently Asked Questions
How do I customize this contract to fit my business needs?
Customizing this contract involves editing the document to include your business details, terms, and conditions. The templates are designed to be flexible, allowing you to insert your company's name, address, and other relevant information. You can modify clauses to reflect your unique business practices and legal requirements.
Is this contract compliant with laws and regulations?
The legal contract templates are written by legal professionals and designed to comply with current laws and regulations at the time of their writing. However, laws can vary by jurisdiction and change over time, so it's recommended to have your contract reviewed by a local attorney to ensure it meets all legal requirements specific to your region and industry. Templates are licensed as self-help information and not as legal advice.
Can I use the same contract for different clients or projects?
You can use the same contract for different clients or projects. The templates are versatile and easily adapted for various scenarios. You will need to update specific details such as client names, project descriptions, and any unique terms for each new agreement to ensure that each contract accurately reflects the particulars of the individual client or project.
What should I do if I encounter a clause or term I don't understand?
If you encounter a clause or term in the contract that you need help understanding, you can refer to guidance notes explaining each section's purpose and use. For more complex or unclear terms, it's advisable to consult with a legal professional who can explain the clause and help you determine if any modifications are necessary to suit your specific needs.
How do I ensure that the contract is legally binding and enforceable?
To ensure that the contract is legally binding and enforceable, follow these steps:
- Complete all relevant sections: Make sure all blanks are filled in with accurate information.
- Include all necessary terms and conditions: Ensure that all essential elements, such as payment terms, deliverables, timelines, and responsibilities, are clearly defined.
- Signatures: Both parties must sign the contract, and it is often recommended that the contract be witnessed or notarized, depending on the legal requirements in your jurisdiction.
- Consult a legal professional: Before finalizing the contract, have it reviewed by an attorney to ensure it complies with applicable laws and protects your interests.
Ian Lauder has been helping businesses write their proposals and contracts for two decades. Ian is the owner and founder of Proposal Kit, one of the original sources of business proposal and contract software products started in 1997.By Ian Lauder
Published by Proposal Kit, Inc.Disclaimers
Proposal Kit, Inc. makes no warranty and accepts no responsibility for the suitability of any materials to the licensee's business. Proposal Kit, Inc. assumes no responsibility or liability for errors or inaccuracies. Licensee accepts all responsibility for the results obtained. The information included is not legal advice. Names in use cases have been fictionalized. Your use of the contract template and any purchased packages constitutes acceptance and understanding of these disclaimers and terms and conditions.
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