Because joint ventures often have a limited life span, it's important to clearly address terms for dissolution and dispute resolution in your Joint Venture Agreement.
LawDepot's Joint Venture Agreement provides two options for dissolving the venture: through either a majority or unanimous vote by the members. If a joint venture wants to ensure the management decision benefits all members, they should seek a unanimous vote. Often, the members agree in advance on a date for the agreement to end (i.e., a fixed-term joint venture).
The members might wish to provide guidelines for competition and confidentiality. Clauses such as a duty of loyalty and confidentiality help protect the business interests of the parties involved, particularly when the partnership involves jointly owned intellectual property.
However, it's important to note that the enforceability of these terms may vary depending on your situation. That being said, including terms for dispute resolution can help members resolve conflicts outside of court.
When deciding whether to resolve conflicts through mediation or arbitration, you should consider who you want to make a final decision: the members of the joint venture, or a neutral third party.
In mediation, JV members hire a mediator to facilitate negotiations but decide the outcome themselves. With arbitration, an arbitrator reviews the situation from both sides and makes a final decision that members must follow.
While the members of a joint venture will likely have each other's best interests in mind, including terms for dispute resolution provides peace of mind in case negotiations turn sour.