As we saw earlier in this chapter, a partnership is not limited to a direct link between people, but can also include a connection between other entities such as corporations or even partnerships themselves. A joint venture – sometimes referred to as a joint venture, co-adventure, joint venture, joint venture, union, group or pool – is an association of people who perform a specific task until it is completed. Essentially, a joint venture is a “temporary partnership.” In the United States, the use of joint ventures with railroads began in the late 1800s. In the mid-twentieth century, joint ventures were common in the manufacturing industry. In the late 1980s, they increasingly appeared in the manufacturing and service sectors, as companies sought new competitive strategies. They are aggressively advertised on the Internet: “Joint ventures are in place, and if you don`t use this strategic weapon, there`s a good chance your competitors will use it to their advantage or will soon use it. maybe against you! (Scott Allen, “Joint Venturing 101,” About.com Entrepreneurs, entrepreneurs.about.com/od/beyondstartup/a/jointventures.htm). As a risk avoidance tool, the joint venture allows two or more companies to pool their different know-how, so that none of them have to “learn” from the start; no one needs all the capital to start the business. In general, partnership rules apply, although the relationship of joint ventures is closer to that of the specific agency than to the general agency, as discussed in Chapter 38 “Client-Representative Relationship”. Venturers are trustees among themselves.
Although no formalities are required, employees usually sign an agreement. The joint venture does not need to have a group name, although it may have one. The property can be owned together. Profits and losses are shared as in a partnership, and every employee has the right to participate in the administration. The liability is unlimited. Sometimes two or more companies form a joint venture to perform a specific task – oil exploration, construction of a nuclear reactor, basic scientific research – and form the joint venture. In this case, the resulting company – known as the “Joint Venture Corporation” – is subject to corporate law, not corporate law, and is not a joint venture as described herein. Increasingly, companies are creating joint ventures to do business abroad; foreign investors or governments hold significant stakes in these joint ventures. For example, in 1984, General Motors entered into a joint venture with Toyota to revive GM`s closed assembly plant in Fremont, California, and establish New United Motor Manufacturing, Inc. (NUMMI).
For GM, the joint venture was an opportunity to learn more about lean manufacturing from the Japanese company, while Toyota acquired its first manufacturing base in North America and was able to test its manufacturing plant in a U.S. work environment. In May 2010, when the collaboration ended and the plant was closed, NUMMI was building an average of six thousand vehicles per week, or nearly eight million cars and trucks. These vehicles were the Chevrolet Nova (1984-88), the Geo Prizm (1989-97), the Chevrolet Prizm (1998-2002) and the Hilux (1991-95, predecessor of the Tacoma), as well as the Toyota Voltz, the Japanese right-hand drive version of the Pontiac Vibe. The last two were based on the Toyota Matrix. Paul Stenquist, “GM and Toyota`s Joint Venture Ends in California,” New York Times, April 2, 2010, wheels.blogs.nytimes.com/2010/04/02/g-m-and-toyotas-joint-venture-ends-in-california. Family members can be partners, and partnerships between parents and minor children are legal, although a minor partner may reject the agreement. The establishment, organization and dissolution of partnerships shall be governed by the law of the State. Suppose three people have decided to partner to run a car dealership. Able is contributing $250,000. Baker will bring the building and space in which the company will operate.
Carr provides his services; he will direct the dealership. When forming a partnership, three of these points deserve special attention. And again, note that if the parties don`t provide for them in their agreement, RUPA will do so as a standard for them. Non-registered non-profit organizations (UNAs) cannot be partnerships. The lack of coherent legislation governing these organizations led to the promulgation of the revised Uniform Law on Unincorporated Unincorporated Associations (RUUNAA) by the National Conference of Commissioners for Uniform Laws in 2005. The notice prior to this law states: “RUUNAA was designed for small informal associations. It is unlikely that these informal organisations will benefit from legal advice and therefore do not take into account legal and organisational issues, including the desirability of integration. The law offers better answers than the common law to a limited number of legal problems.
There are likely hundreds of thousands of UNAs in the United States, including unregistered non-profit philanthropic, educational, scientific, and literary clubs, sports organizations, unions, trade associations, political organizations, churches, hospitals, and condominium and neighborhood associations. “Revised Uniform Law on Non-Profit Associations Without Legal Capacity, www.abanet.org/intlaw/leadership/policy/RUUNAA_Final_08.pdf. At least twelve states have taken over RUUNAA or its predecessor. “Implicit partnership” is a partnership that is not expressed, but proposed or implied. Sometimes “implied” means that it is clear from the actions of the parties, but is not clear in writing or orally. Under Texas law, the Dallas court investigated the following factors: (1) obtaining or entitlement to receive a share of the Company`s profits; (2) Expression of the intention to be a partner in the company; (3) participation or the right to participate in the control of the enterprise; (4) share or agree on the participation: (A) losses of the company; or (B) liability for third party claims against the Company; and (5) contribute to or accept any money or property to the Company. The Big Easy Companies responded that this was expressly part of the agreement between the operators of a single restaurant and the other companies. The Florida Corporation owned the IP, ensured its value, performed administrative functions and received payment for these services. They argued that they did not share control of different companies as an implicit partnership. If what two or more people own is clearly a business – including capital assets, contracts with employees or agents, a source of income, and debts incurred in the name of the operation – there is a partnership. A more difficult question arises when two or more people own property together.
Do they automatically become partners? The answer may be important: if one of the owners, while doing business relevant to the property, injures a stranger, he could sue the other owners if there is a partnership. .