Alberta Law Reform Institute Final Report on Joint Ventures

The Alberta Law Reform Institute has released its final report on joint ventures:

"Joint ventures by business entities have  become increasingly common and increasingly important to the economic life of Canada and other countries. They are prevalent in the construction industry for large projects such as dams, road works and public buildings. They are often used in the energy industry to provide efficiencies in the development of oil and gas properties. They are also used for smaller undertakings such as the development of a small subdivision. However, while the joint venture has developed, the legal landscape in which it operates has not developed to accommodate it. In particular, a joint venture is at risk of being categorized for legal purposes as a partnership and thus subject to a Partnership Act first adopted in 1896 and to common law that has developed over the centuries. There is thus a lack of fit between the applicable law on the one hand and the exigencies of present-day joint ventures on the other hand. This lack of fit results in a degree of uncertainty which has not necessarily been removed even if joint ventures have attempted to assert their status clearly. "

"The purpose of this report is to recommend legislative reform to clarify the lack of certainty by allowing a joint venture to take itself out of the law relating to partnership. To do so it would have to meet two requirements – declare in writing that it is not a partnership and carry on business under a name that includes 'Joint Venture' or 'JV'. A joint venture that meets these conditions would effectively take itself out of the law applicable to partnerships. This aspect of our recommendations would clarify the law relating to the relationships among joint venturers. The second aspect of our recommendations would clarify the law relating to the relationship between a joint venture and third parties. We do this by simplifying and redefining the basis of liability between the joint venturers and third parties. Finally, we set out the timing and effects of how a new or existing joint venture might meet these requirements. "

There is more background on the Commission's joint ventures project on its website.