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Introduction to Joint Venture 🤝

Scenario:

  • Raj is a builder. Simran is an architect.
  • They decide to build a Shopping Mall together.
  • They agree to share profits 50:50.
  • Once the mall is built and sold, their partnership ends.
  • This temporary partnership is called a Joint Venture.

Definition: "A Joint Venture is a temporary partnership formed for a specific purpose or project. Once the purpose is achieved, the venture is dissolved."

Parties: The partners are called Co-Venturers.

Key Features 🌟

  1. Temporary Nature: It has a limited life (e.g., 1 year or 1 project).
  2. Specific Purpose: Build a bridge, underwrite shares, sell a consignment of goods.
  3. No Firm Name: Usually, they don't give a name to the firm (unlike "Raj & Co.").
  4. Profit Sharing: Profits/Losses are shared in an agreed ratio.
1. Agreement"A and B agree to work together."
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2. Execution"They contribute money and work."
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3. Completion"Project done. Profit calculated."
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4. Dissolution"Profit shared. Bye Bye!"
Joint Venture vs Partnership

Partnership: Long term. Ongoing business. Registered firm name. Joint Venture: Short term. One-time project. No firm name.

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. Joint Venture is a:

Permanent Partnership
Temporary Partnership
Company
Non-Profit Org

💡 Final Wisdom: "Think of it like a 'Group Project' in college. You come together, do the work, get the grade (Profit), and then go your separate ways." 🎓

Next up: Joint Venture vs Consignment - Spot the difference! 🆚

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