Distinction between joint Venture and Partnership

Joint venture is not a partnership in strict sense though we call it a temporary partnership.

It differs from partnership and its salient points are outlined as follows:

Joint Venture:

1. There is no necessity for a trade name.
2. The parties in Joint Venture are known as co-venturers.
3. The minimum number of co-venturers is two and there is no limit for maximum.
4. It is temporary in nature. It is formed for special purpose and it ceases to exist on completion of a particular business.
5. The agreement is not registered in order to make it enforceable against the third parties.
6. Co-venturers are free to have their own independent business of the same type.
7. The profit is ascertained for each venture.
8. Co-venturers have no implied authority.
9. There is no joint and several liabilities unless there is special agreement.
10. There is no special Act for Joint Venture.
11. It is not necessary to maintain separate and per­manent record of accounts.

The determination of profit and losses of the joint venture can be done as follows:

• If the Venture is formed for short duration: At the end of the Venture
• If the Venture is formed for a long duration: On Interim Basis

Some popular example of Joint Venture business is:

• Sony Ericsson is a joint venture to make mobile phones where Sony is a Japanese electronics company, and Ericsson is a Swedish telecommunication company.
• Caradigm, a joint venture between Microsoft Corporation and General Electric Healthcare.
• Hero Honda, a joint venture between Hero Cycles India and Honda Motor Company Japan to manufacture two-wheeler vehicles.

Partnership:

1. The firm has a specific trade name.
2. The parties in partnership are known as partners.
3. Minimum number is two and maximum number is ten in case of banking business and 20 in other businesses.
4. It is a continuous business operation and it is not restricted to a particular operation.
5. It must be registered in order to make claim of partnership against the third parties.
6. Partners cannot independently undertake a business of similar nature.
7. The profit is ascertained annually.
8. Partners have implied authority.
9. There is joint and several liabilities on partners.
10. There is a separate Act Known as Indian Partnership Act 1932
11. The firm must maintain a separate set of books of account on a permanent basis.

The following are the features of partnership:

• An association of two or more than two individuals.
• Agreement between the partners for carrying on business.
• Business to be carried on by all or any one partner on behalf of all the partners.
• The partners must share profits and losses in an agreed ratio.
• The liabilities of the partners are unlimited.

There can be minimum two members in a partnership firm, and the maximum limit of partners is 10 in the case of banking business and 20 for other business. Partners are held liable for the acts done in the name of the firm.