A joint venture agreement is an arrangement where two companies develop a new entity to their mutual benefit. It normally involves a sharing of resources, which could include capital, personnel, physical equipment, facilities or intellectual property such as patents.

A joint Venture and a Partnership are two different things. A joint venture can be described as a contractual arrangement between two companies that aims to undertake a specific task. Whereas, a partnership involves an agreement between two parties wherein they agree to share the profits as well as any loss incurred.

Advantages of Joint Venture:

A joint venture agreement provides a company with expertise it may not have or may not be willing to invest in acquiring itself. For example, if one company has a combustible material research lab that the venture requires, the company without the lab gains the benefit of an already established lag. There is an element of risk in most joint ventures. Both joint-venture parties share in the risk, such as a financial investment.