A Joint Venture Agreement defines the governance, contributions, and profit sharing between co-venturing entities. This playbook examines dispute resolution, management control, and exit provisions.
Why This Matters: A well-defined scope prevents disputes, cost overruns, and scope creep by aligning expectations from the outset.
Negotiation strategy
If you're the JV Partner A:
Ensure the scope is comprehensive and aligns with your business objectives. Insist on clear performance metrics and a robust change management process.
If you're the JV Partner B:
Negotiate to include flexibility in the scope to accommodate potential changes. Ensure that deliverables and timelines are realistic and achievable.
Essential elements
1
Service Description
Detailed tasks and deliverables.
2
Performance Metrics
Standards for measuring service quality.
3
Change Management
Process for scope modifications.
Action framework
ACCEPT
Propose edits if the scope lacks clarity or measurable metrics.
EDIT
Reject if the scope is ambiguous or lacks a change management process.
ADD
Add language to specify deliverables and performance standards.
PRO TIP
Always include a formal change management process to handle scope modifications effectively.
Example clauses
FAVORABLE
Preferred Scope of Services Clause
"The Service Provider shall perform the services described in Exhibit A (the 'Services'). The Services shall include, but not be limited to, the tasks and deliverables specified therein. The Service Provider shall perform the Services in accordance with the standards and specifications set forth in this Agreement."
NEUTRAL
Fallback Scope of Services Clause
"If the counterparty resists, negotiate to include at least the key elements: service description, performance metrics, and change management."
UNFAVORABLE
Vague Scope of Services Clause
"The Service Provider will provide services as needed, with details to be determined later."
Fallbacks
Complex Service Arrangements
If the services involve multiple phases, subcontractors, or international elements, further analysis is required to ensure that the scope accounts for all variables.
High-Risk Projects
For projects with significant risk, ensure the scope includes detailed risk management and mitigation strategies.
Long-Term Contracts
In long-term contracts, include provisions for periodic scope reviews and adjustments to address evolving needs.
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