Most joint venture disputes don't happen because someone acted in bad faith — they happen because an important term was never written down in the first place. A thorough JV agreement covers far more than "who's putting in what." Here are the clauses that matter most.
Contributions and roles
Spell out exactly what each party is contributing — cash, property, equipment, expertise, or ongoing services — and what role each party plays day to day. Vague descriptions like "sweat equity" invite disagreement later about what was actually promised.
Profit and loss allocation
Define how profits and losses are split, and just as important, when and how distributions happen. A percentage split alone doesn't answer whether profits are distributed monthly, quarterly, or only at project completion.
Governance and decision-making
Who has authority over day-to-day decisions, and which decisions require both parties' sign-off? Common models include a single managing partner, majority vote, unanimous consent on major items, or a joint committee. Whatever you choose, write it down.
Non-compete and non-circumvention
Consider whether either party should be restricted from competing with the venture, or from going around the JV to deal directly with a customer or partner the other side introduced. These clauses protect the value each side brought to the table.
Intellectual property ownership
If the venture will create anything — a product, content, a brand, software, or processes — decide upfront who owns it, both during the JV and after it ends. This is one of the most commonly overlooked clauses, and one of the most fought-over later.
Dispute resolution and indemnification
Specify how disputes get resolved — mediation, arbitration, or court — and which state's law governs the agreement. An indemnification clause addresses who bears responsibility if the venture causes harm or loss to a third party.
Key takeaway
A deadlock-breaking mechanism (what happens if the parties simply can't agree) and a buy-sell/exit valuation method (how to value one party's stake if they leave early) round out the list of clauses most general JV agreements are missing.