HKSM
Joint Venture Contract
A contract where two or more parties team up to execute a project's work and agree to share the resulting revenues or other benefits, ensuring each party receives a return on investment.
Key Points
- Parties jointly perform the work and share profits, benefits, and often risks and liabilities.
- Defines each partner's contributions, governance structure, and decision-making authority.
- Specifies how costs are allocated and how profits or benefits are distributed.
- Useful when combined capabilities are needed to win or deliver the project.
Example
A software vendor and a systems integrator form a joint venture to build a citywide ticketing platform. They pool staff and funding, deliver the system together, and split subscription and maintenance revenues based on a pre-agreed formula.
PMP Example Question
A sponsor proposes that a product company and an implementation partner collaborate to deliver a national platform and share the subscription income. Which agreement best fits this situation?
- Fixed-price incentive fee contract between buyer and seller
- Joint venture contract between the partnering organizations
- Time and materials contract with a not-to-exceed cap
- Non-disclosure agreement
Correct Answer: B — Joint venture contract
Explanation: The scenario describes partners performing the work together and sharing resulting revenues, which is characteristic of a joint venture contract.
