Main Agreement Form

WHEREAS:

  1. the Employer has invited interested companies to submit offers for the Project;
  2. the Joint-Venture Members wish to submit a joint Offer for the Project, and, if the Offer is accepted by the Employer, to jointly implement the Project;
  3. the Joint-Venture Members anticipate that submission by them of individual offers would economically and/or technically not be feasible and therefore not lead to any of them being the successful bidder;
  4. the Joint-Venture Members wish to be selected and appointed by the Employer jointly, to execute and carry out the Work under the terms of the Contract, including any addition or variation thereto, which may be ordered by the Employer under the Contract. To enable the proper performance of the Work to be so carried out the Joint-Venture Members have agreed to enter into this Joint-Venture Agreement on terms and conditions set forth herein;

IT IS AGREED AS FOLLOWS:

  1. In this Main Agreement Form, all capitalised words and expressions shall have the same meanings as are assigned to them in this Main Agreement Form or the General Conditions.
  2. The Joint-Venture Members agree to co-operate based on the terms and subject to the conditions of this Agreement, as more particularly described in Section I Special Conditions, Section II General Conditions and the Annexes as attached hereto.[Page12:]
  3. Specifically, the Joint-Venture Members agree to make Contributions2to and share the profits and losses of the Project in line with the following Proportionate Values3as they may be amended from time to time under Article 17.3:

Each of the Joint-Venture Members shall at all times and in all respects bear the responsibility and burden of completing the Contract in the respective proportion stated above, as against the other Joint-Venture Members.

The following Sections shall be read as one document and form the Agreement and, in the event of ambiguity or contradiction between the Sections, the ambiguity or contradiction shall be resolved by giving precedence to the Sections in the order listed as follows:

>> Main Agreement Form

>> Section I — Special Conditions

>> Section II — General Conditions

>> Annex 1 — Contributions

>> Annex 2 — Financial Plans

>> Annex 3 — […]4

Whereas the Joint-Venture Members have executed this Agreement by duly authorised representatives on the day and year first above written. 5

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1
While the number of members in theory is not restricted, the user should be aware that the higher number is, the more complicated and potentially inefficient the implementation of the project will be whatever the decision-making agreement, i.e. whether unanimity or majority determined.

2
Contributions may be of varied nature, including in cash, in tangible and intangible assets or and in services materials and equipment. They are essential to the validity of a joint venture in many jurisdictions. They, and their valuation, are also one of the main subjects that the Joint-Venture Members need to negotiate and agree since the respective Proportionate Values which will result from the negotiation will command voting rights and shares in the profits or losses. Because the relative value of contributions is essentially case-specific, this Model Agreement will not suggest one method of valuation in particular. Users need to involve their financial resources, in-house or external, in order to determine which method is appropriate for their venture. One recognized method is that all parties shall make their contributions at cost and reserve all profit making to the joint venture. This method is however not appropriate when one or more contributions are not appropriately valued by sole reference to cost, such as in cases where a premium should be allowed for a single player in a specific field or when innovative intangible assets contribute far more to the margin of the project than their relative cost value. When the parties fail to agree on the respective value of their contributions, an independent valuation (at shared cost or otherwise) may serve to reach an agreement or to protect the valuation agreement from future criticism of potential audits, whether internal or external.

3
As the members of the Joint Venture share in the profits and the losses generated by the Joint Venture each member sharing in the total needs to be established; what is the value of the contribution of one member compared to that of the other(s)? This can be established by adding up all the hours of the personnel seconded by that member to the joint venture, the hourly/daily rates and length of secondment of main plant and equipment seconded to the joint venture, the cost of materials supplied to the joint venture, the value of any intellectual property or intangible asset brought to the project or any other kind of contribution. The project budget will make it relatively easy to identify what will be contributed and, apart from the specific rules which govern the valuation of intangibles, once established who contributes what, simple multiplication and addition will reveal each member’s contribution. Compare the overall contribution to each individual member’s contribution and one can establish the participation in the Joint Venture. When during the course of the project the contribution of items changes significantly, recalculation of the participation percentages and therewith the share of each member in profits or losses of the project calls for an agreement on an amendment to the Agreement.

4
Further Annexes might be used, e.g. to cover Health, Safety and Environmental issues, Project procedures, Determination of costs and such, etc.

5
5 It would normally be a good idea to have a witness from all Joint Venture Members witness all signatures and examine the ID documents, business cards or powers of attorney of those signing as duly authorised representatives. If appropriate, a chop or seal should be attached from the Joint-Venture Members.