Definitional Differences between Joint Ventures, Partnerships, and Strategic Alliances Difficult to Pin Down for New York Businesses (and Others)
Part of the problem lies in the very close and overlapping definitional terminology used to describe the various frameworks. Throughout many an agreement, treatise, or other resource, the terms “partnership,” “joint venture” and “strategic alliance” are loosely used to describe a broad and sometimes frustratingly wide array of business transactions and relationships. So today, we will begin our discussion simply with the definitions found in Black’s Law Dictionary, Eighth Edition. It defines these various terms as follows:
“PARTNERSHIP. A voluntary association of two or more persons who jointly own and carry on a business for profit.* Under the Uniform Partnership Act, a partnership is presumed to exist if the persons agree to share proportionally the business’s profits or losses.
“JOINT VENTURE. A business undertaking by two or more persons engaged in a single defined project.* The necessary elements are: (1) an express or implied agreement; (2) a common purpose that the group intends to carry out; (3) shared profits and losses; and (4) each member’s equal voice in controlling the project. – Also termed joint adventure; joint enterprise. *
‘There is some difficulty in determining when the legal relationship of joint venture exists, with authorities disagreeing as to the essential elements . . . . The joint venture is not as much of an entity as is a partnership.” Henry G. Henn & John Alexander, Laws of Corporations Section 49, at 106 (3rd ed. 1983).’”
“STRATEGIC ALLIANCE. A coalition formed by two or more persons in the same or complementary businesses to gain long-term financial, operational, and marketing advantages without jeopardizing competitive independence through their strategic alliance, the manufacturer and distributor of a codeveloped product shared development costs.”
In the coming weeks, this blog will explore the differences inherent in these definitions through practical real world examples.
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