The terms of a joint venture agreement will be broadly similar to those of the shareholders` agreement, with the notable exception that not all provisions relating to the incorporation, registration or liquidation of a company will be necessary. The choice of the law that is subject to the partnership relationship must be carried out carefully after the qualification of the common purpose, in order to determine each other the obligations of the partners of a contractual joint venture and to settle disputes arising from those obligations. We are aware of situations where the replacement of a member was considered as part of a project because such a member was in an insolvency situation. Failure clauses should deal with such a situation and allow other members to follow the project alone or with another party. As noted above, a risk area is the joint venture bank account, which may potentially be targeted by creditors (including subcontractors or employees) of an insolvent member; this can be a strong incentive to evict a company that is late from the company. Usual clauses in consortium and joint venture agreements While a UJV or consortium contract is a sui generis contract, if there is a high degree of contractual freedom, it would be wrong to assume that local jurisdiction laws in which the project is being implemented should not be considered, as explained below.  This is the case under UAE law, whereas KSA law contains certain limited provisions that are relevant to contractual joint ventures in the terms of its public procurement legislation, as we will continue to develop at a later date. It is interesting to note that the Trade Policy Companies Act in Qatar contains some general provisions on UJVs, which we will discuss below. By way of comparison, it should be noted that there is also no definition of a joint venture under English or French law (the “temporary grouping of companies” is, to the extent that, in practice).
When the joint venture enters into a contract (whether it is a principal contract with the employer or a contract with suppliers, subcontractors or consultants), it means that each member of the joint venture has given a mandate to a common representative who is authorized to sign that contract on behalf of each member. Another characteristic of a joint venture is that, as a general rule, no specific capital injection is allocated to the partnership. The common goal can be achieved through actions related to partner holdings7. One of the advantages of a contractual joint venture is that the assets provided by the partners based on their actions are not allocated to the common ownership of the other.8 Since this type of joint venture is qualified as a single business partnership, the sale or liquidation of collective or joint owners is not necessary, saving time and money, both in terms of aggregation and separation.