A joint venture is formed when two or more people or entities join forces to undertake a common and defined business opportunity. Illinois courts consider the following things in determining if a joint venture exists: (a) whether the business owners have a common purpose in the joint association; (b) whether they each have the ability to direct and govern the policy or conduct of the others; (c) whether they each have a right to joint control and management of the property used in the association; and (d) how profits and losses are shared.
While joint ventures can be intentionally created, oftentimes business owners find themselves in “accidental” joint ventures as a result of not properly making it clear to the public what the relationship is between the individuals and entities that are doing business together. And although the absence of any of the four elements listed above means there is no joint venture, defending against a claim that a joint venture exists can be very expensive. So it is better business practice to make sure that your marketing is clear regarding what your proper business relationships are so as to avoid the appearance of a joint venture.
Finally, all the venturers are held to equally own the joint property. But they are also obligated (sometimes personally if individuals are the joint venturers) to pay joint debts and obligations. In other words, there may not be any corporate shield or protection for joint venturers.