The duration of a joint venture depends on the terms of the contract between the parties. The venture will continue until the time stipulated in a contract. But where an agreement lacked a definite term of duration, it may be terminated at will by either party[i].
When there is no express contractual term fixing the duration of the agreement, some proof establishing the intention of the parties on the duration will need to be produced[ii].
When there is nothing to show the intention of the parties regarding duration of the joint venture, the objective of the joint venture will be considered. The objective of a joint venture can be the completion of a specified piece of work or attaining a specific result. It will be presumed that the parties intended the relation to continue until the object has been accomplished. Whether a venture is at will, for a fixed term, or until the accomplishment of a particular undertaking is a question of fact. Thus, when there is no express term in a contract fixing duration, courts may inquire into the intent of the parties[iii].
An agreement for a joint adventure may also remain in effect only until the purpose of the agreement is ascertained as cannot be accomplished[iv].
Under certain state laws, the duration of a joint venture is subject to the same rules as a partnership[v]. The reason behind joint ventures being governed by the same legal rules as partnerships is that a joint venture is in essence a partnership for a limited purpose. However, certain statutes providing for the continuation of a partnership as a separate legal entity after dissociation of a partner has no application to a joint venture. A joint venture cannot continue in business as a separate legal entity after one joint venturer withdraws from the venture. It is because a joint venture is not an entity separate from the parties composing it and a co-venturer is not entitled to have the partner dissociated from the joint venture and have it continue in business[vi].
The duration of a joint venture will not be affected by trifling matters or temporary grievances which cause no permanent mischief[vii].
When the purpose of a joint venture is to purchase a land, build a house in the land, and sell the house, the venture will not be over when the parties receive the profit. It will be over only when the venture is properly wound up by settling all the dues the joint venture holds and issuing a proper accounting to each party in a joint venture[viii]. Thus, a venture is terminated when the specified time has expired, except for the purposes of winding up its affairs, accounting and settlement of assets and liabilities.
A joint venture continues to exist legally in the matter of tort responsibility as it may be found liable for damages arising from joint venture activities. Its members may be sued individually and found liable for damages caused by the joint venture[ix].
A joint venture may continue even if a member of a joint venture conveys his/her interest to a third person. It may continue when the parties to the joint venture continue to act and deal together on the basis of continuance of the joint venture. The intention of the parties will be looked into to determine whether a joint venture is continuing and not dissolved or terminated. Thus, a transfer of interest may not put a stop to the duration of a joint venture.
[i] LoGerfo v. Trustees of Columbia Univ. in City of New York, 2006 NY Slip Op 9188, 2 (N.Y. App. Div. 2d Dep’t 2006).
[ii] Rutecki v. S.H. Gow & Co., 289 A.D.2d 1066, 1067 (N.Y. App. Div. 4th Dep’t 2001).
[iii] Hooker Chemicals & Plastics Corp. v. International Minerals & Chemical Corp., 90 A.D.2d 991, 1982 N.Y. App. Div. LEXIS 19278.
[iv] Morrison v. Caspersen, 323 S.W.2d 697, 1959 Mo. LEXIS 863.
[v] Daily States Pub. Co. v. Uhalt, 169 La. 893, 1930 La. LEXIS 1613.
[vi] .Costa v. Borges, 145 Idaho 353, 2008 Ida. LEXIS 29.
[vii] Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229 (S.C. 1989).
[viii] McIver v. Norman, [NO NUMBER IN ORIGINAL], SUPREME COURT OF OREGON, 187 Ore. 516; 205 P.2d 137; 1949 Ore. LEXIS 138.
[ix] Scholastic, Inc. v. Harris, 259 F.3d 73, 2001 U.S. App. LEXIS 16961.