Chapter 7. The Joint Venture Relation

"7.1. INTRODUCTIONThis chapter addresses the joint venture and examines a number of general concepts of the joint venture relationship. Chapter 8 looks at some specific concepts related to the provisions of a joint venture agreement, which are equally applicable to a shareholders’ agreement or other contractual relationship. The term “joint venture” is used because the author is a common law solicitor (a matter of convenience for which apologies are offered to civil law readers), but it should be noted that, in many aspects, the legal structure of an entity is irrelevant. It is the relationship of the parties, be they venturers or shareholders, that is important, and the areas of concern are surprisingly similar (except for terminology).The details of the joint venture relationship and agreement could fill several books. Accordingly, this chapter and the next focus on selected topics that appear to have caused problems or confusion or to be the basis for disputes. And remember that, although the following discussion is in the context of a joint venture, many of the comments apply, either directly or indirectly, to virtually any common undertaking and the agreement defining it.For interest’s sake, this chapter starts with a summary of some of the earlier types of agreements and arrangements that have evolved into the joint venture agreement of today in Canada, the philosophy of their format, and the reasons for their demise.7.2. EVOLUTION OF THE CANADIAN JOINT VENTUREThe Early DaysMuch of the opening up of Canada’s north is due to exploration for and development of mines. The early discoverers were relatively free to roam and explore at will and, if they were fortunate enough to find something, they dealt with the appropriate government to acquire exploitation rights. The early interests lay in gold or silver. Workings were small, usually worked by the owner alone or with only a couple of helpers to extract the native gold or silver. If the owner wanted to move on, he could sell his property outright and use his stake to look elsewhere.As logging and mining camps were opened, the development of better roads and railways made access easier. Entrepreneurs saw the opportunity to make money by assembling large parcels of land and working them as a single operation. In order to do this, some owners who were not ready to sell out had to be convinced to do so through more attractive offers"