What is meant by joint ventures in commercial contracting?

In the context of commercial contracting, joint ventures refer to a business arrangement where two or more parties collaborate on a project, sharing both the risks and rewards associated with it. This type of partnership allows the involved parties to combine their resources, expertise, and capabilities to achieve a common objective that may be difficult to accomplish individually. Joint ventures are often established for specific projects or finite periods and can be an effective way to enter new markets, leverage new technologies, or share significant costs associated with large undertakings.

This collaborative nature distinguishes joint ventures from other business arrangements, as they typically involve a formal agreement detailing the terms of cooperation, distribution of profits, liabilities, and the management structure. In contrast, a scenario where one party maintains complete control does not align with the essence of a joint venture, which inherently requires shared decision-making and responsibility. Additionally, joint ventures are more comprehensive than agreements to share profits without shared resources, as the latter lacks the cooperative aspect essential to a joint venture.