The sibling nature of Partnerships, Collaboration/Teaming, Joint Ventures (JVs) sometimes have lawyers erroneously use one in the stead of the other. In as much as these instruments or engagements appear similar, they also have their striking differences. Using one in the stead of the other could convey the wrong intentions of parties with respect to the subject of the parties coming together. I have personally witnessed businesses go awry for the singular reason of using the wrong instrument.
Here are a couple of striking differences on each of the Agreements stated above;
✍️ Partnership - Here, parties have capital contributions brought into the Partnership in various ratios or percentages as agreed, to build a business or organization together. It's in most cases a full time engagement where all parties in the partnership bring in all required resources to build something from ground up. The active line here is, building an organization or business together as co-owners and it could last for a lifetime. It is not limited to a single project. The parties represent the partnership and the partnership represents them. All parties here share all profits and losses together from the partnership as a single venture.
✍️ Collaboration/Teaming - Here, independent parties who in most cases run their separate businesses agree to put resources together for the execution of a project or course within a timeline. For example, Mr A - who has his company - seeks to source for a job from Company A, but lacks the technical know-how to execute that job if the bid is won by him. So he reaches out to Mr B - who probably has his own company too - who possesses the required expertise for the job and teams up or collaborates with him with respect to that job, contract or project alone. This coming together for the object of winning and executing that job is termed collaboration or teaming and the instrument sufficient here is a Teaming or Collaboration Agreement, not a Partnership Agreement. After execution of the job, both parties go their separate ways.
✍️ Joint Venture - This is the tricky one. Though very similar to Collaboration and Teaming as it's also just for a project or task and is usually short-termed, a JV usually has a separate legal entity from the parties. It is usually incorporated to attain that separate legal entity status.
As a lawyer, and even a business man or woman, it's expedient that the right instrument is utilized for the right purpose to avoid joining issues or misconceptions that could mar the original object of such engagements by the parties.
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