2 Matter Plans Included
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ALERTS - Nil
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Full Commentary - Joint Ventures (AB)
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Reference materials
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AI Prompts
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Electronic Signing and Remote Witnessing
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Business Structures and the Comparative Table (AB)
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Further information
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Overview
A joint venture is a commercial relationship between two or more entities for a particular undertaking or endeavour to realize mutual commercial gains. They may be formed for a fixed or continuous period or a specific purpose.
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A. Getting the matter underway
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File cover sheet - Joint ventures
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To do list - Joint ventures
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First steps
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Client details, verification, and source of funds
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Retainer instructions - Joint ventures
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Conflict of interest check
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Initial letter to client enclosing retainer agreement, due diligence checklist, and steps involved
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Due diligence checklist - Joint ventures
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Enclosure - Steps to establish a joint venture
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Retainer agreement - Alberta
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Scope of work - Joint ventures
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Time and costs estimates
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If required - Costs disclosure update and a non-engagement letter
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Letter to client updating costs disclosure
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Non-engagement letter
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General deeds, agreements, execution clauses, and statutory declarations
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Deeds and Agreements
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Deeds
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Confidentiality deed
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Deed for general use
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Deed of assignment of agreement
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Deed of gift
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Deed of guarantee
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Deed of release
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General deed of indemnity
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Library of standard clauses for deeds
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Amendment clause
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Confidentiality clause for defined information - All parties
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Confidentiality clause for defined information - One party
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Confidentiality clause for terms of agreement - All parties
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Confidentiality clause for terms of agreement - One party
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Costs clause
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Counterparts clause
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Dispute resolution clause
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Events beyond control clause
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Governing law and jurisdiction clause
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Interpretation clause
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No assignment clause
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Notices clause
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Severance clause
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Waiver clause
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Whole agreement clause
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Agreements
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Agreement for general use
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Heads of agreement
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Non-disclosure agreement - Formal
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Non-disclosure agreement - Informal
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Library of standard clauses for agreements
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Amendment clause
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Confidentiality clause for defined information - All parties
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Confidentiality clause for defined information - One party
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Confidentiality clause for terms of agreement - All parties
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Confidentiality clause for terms of agreement - One party
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Costs clause
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Counterparts clause
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Dispute resolution clause
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Events beyond control clause
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Governing law and jurisdiction clause
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Interpretation clause
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No assignment clause
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Notices clause
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Severance clause
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Waiver clause
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Whole agreement clause
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Execution clauses
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Execution clauses - Agreements and contracts
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Execution clauses - Deeds
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Statutory declaration
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Statutory declaration
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Standard annexure note for documents
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B. Establishing a joint venture
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Joint venture structures
The three main ways to structure a joint venture are analyzed in the table below:
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Advantages of joint ventures
Contractual joint ventures
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Disadvantages of joint ventures
Contractual joint ventures
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Powers, rights, and responsibilities of joint venturers
Venturers in a contractual joint venture have the freedom to determine the control and management of the joint venture. The joint venture agreement sets out how the joint venture is controlled and managed. A corporate joint venture’s control is vested in the board of directors and regulated by ...
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Liability
The liability of the venturers depends on the business form of the joint venture. For a contractual joint venture, the agreement determines the parties’ liabilities and may address the extent to which parties are entitled to indemnity or contribution from other parties. Also, an agreement between ...
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Taxation considerations
A joint venture’s taxation depends on its form. Corporate joint ventures are taxed as corporations, and joint venture partnerships are taxed as partnerships. Contractual joint ventures are not separate taxpayers. Joint venture gains and losses are taxed in the hands of the joint venturers who make ...
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Preliminary considerations when establishing a contractual joint venture
A contractual joint venture is established by the venturers executing a joint venture agreement. It must ensure a joint venture is established and not a partnership. Considerations:
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The joint venture agreement
The joint venture agreement regulates the relationship between venturers. The following issues are covered in the joint venture agreement precedent:
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Joint venture agreement
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Incorporated joint venture agreement
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Joint ventures for property development
By Lawyers publish several joint venture agreements which include all the necessary clauses dealing with the completion of the development in accordance with attached plans and specifications and the vesting of ownership of each venturer’s interest in the development. For example, a property owner ...
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Joint venture agreement for a property development project
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Joint venture agreement for a townhouse development project
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Project management agreement
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Letter to client enclosing draft agreement
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Letter to co-venturer's lawyer enclosing draft agreement
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C. Dispute resolution
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Dispute resolution
Common sources of joint venture disputes include:
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Litigation
If dispute resolution fails, the parties to the joint venture can proceed to litigation. Such litigation is inevitably lengthy, expensive, and carries some risks, including the risk of being found to be a partnership for contractual joint ventures.
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Fiduciary duties
Fiduciary duties are imposed in relationships where trust and confidence are essential. They require parties to act in good faith and with loyalty. In joint venture partnerships, fiduciary duties apply, with the Partnership Act 2000 imposing obligations on each partner. These duties can be ...
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Deed of release
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D. Exiting or ending a joint venture
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Termination
A joint venture will end on the completion of a fixed-term or on notice from a party. However, if only one party remains, the joint venture will automatically terminate, and its affairs must be wound up.
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Withdrawal
A joint venturer may wish to withdraw from the venture to avoid future financial obligations. The ability to withdraw depends on the terms of the joint venture agreement, the venture’s structure, and the nature of its undertaking.
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Letter to co-venturer with notice of intention to terminate or withdraw and right of offer
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Selling and assignment
The joint venture agreement should provide how to assign an interest to a third party, although pre-emptive rights for the remaining participants commonly restrict this right.
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Asset sale agreement
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Deed of assumption
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Letter to co-venturer with notice of intention to sell interest and right of first refusal
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E. Finalizing the matter
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Finalizing the matter
It can be useful to foster these professional relationships. Business clients often require ongoing legal advice and support. By establishing a strong working relationship with them, lawyers can develop a loyal client base. Working with such clients can also expose the firm to a wide range of ...
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Letter to client finalizing the matter
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Invoice recital - Joint ventures
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Closing the file
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File closing checklist
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Comments and suggestions for By Lawyers
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Business Structures and the Comparative Table (AB)
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Overview
This commentary assists with the set-up of a new business structure, the acquisition of an existing structure, and the change from one structure to another. It covers each structure in relation to income tax, capital gains tax, asset protection, control and succession, set-up and running costs, and ...
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A. Comparative table
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Comparative table
The below table considers each structure in relation to the following:
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B. The structures
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Sole proprietorship
A sole proprietorship, also known as a sole trader, is the simplest business structure. The business has no separate legal existence or personality from its owner. It is owned and run by one individual who is responsible for all the business debts and liabilities. There are minimal set-up ...
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Partnership
A partnership is a relationship between people carrying on a business in common with a view to making a profit. A minimum of two partners is required to form a partnership, but there is no maximum number of partners. The partnership agreement governs the partnership. All partners have the authority ...
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Corporation
A corporation is a legal entity separate from its shareholder owners. Under the Business Corporations Act RSA 2000, c B-9, the two types of corporations are limited liability corporations and unlimited liability corporations. The liability of the shareholders of a liability corporation is limited ...
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Joint venture
A joint venture is a commercial relationship between two or more entities for a particular undertaking or endeavour to realize mutual commercial gains. Joint ventures are established for a specific purpose. The three types of joint ventures are:
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Trust
A trading trust is where the trustee holds property, incurs liabilities, earns income, and distributes it to the beneficiaries of the trust. The trustee is personally liable unless otherwise agreed with the transaction’s other party. The trust deed normally provides for the trustee to be ...
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Association
Associations are generally not used for business as they protect a committee and members of a group, usually conducting a not-for-profit activity.
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C. Comparing the structures
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Income tax
Income splitting can minimize income tax. This involves moving income from a high-income tax rate entity to a low-income tax rate entity so that the extra income is taxed at a lower rate. It is more difficult for sole proprietors and partners in a partnership to split income than in other business ...
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Capital gains tax (CGT)
Capital gains are added to taxable income for the tax year in which it was incurred. For a capital gain realized before January 1, 2026, one-half of the capital gain is taxed.
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Asset protection
Sole proprietor A sole proprietor is liable to the full extent of their assets.
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Control and succession
Most clients seek to minimize their tax liability, provide for the protection of their assets, and retain full control of their affairs.
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Set-up and running costs
Sole proprietor Set-up and running costs for a sole proprietor are minimal. There are no post-establishment statutory obligations, apart from tax return obligations.
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Flexibility
Sole proprietors and partnerships Sole proprietors and partnerships made up of individuals have no ability to split income with non-principals. However, it is easier for a sole proprietor to convert to other business structures.
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D. Other considerations
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Trust income designation
Section 104(13.1) of the Income Tax Act 1985 permits a trust to designate income paid or payable to a beneficiary as retained by the trust and taxable in the hands of the trust. This is known as the section 104(13.1) designation and is usually used by a Canadian resident trust to offset a ...
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Relationship between entities, names, and trademarks
Many clients believe they have protected a trading name by registering a corporation name, business name, or domain name, however, this is not the case. A business name is merely a name under which a business operates. The purpose of business name registration is to maintain a register of those who ...
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