Business partnerships have existed since the beginning of commerce, and they exist in different capacities. Consortiums and Joint Ventures are two types of modern business partnerships that share similarities but also differences.
|It usually only requires a contract.||Asides from the contract, a brand new legal entity is also incorporated.|
|There is usually a finite duration of the partnership in the contract.||It exists until the project or business runs its course.|
|The tasks required are performed separately by members of the consortium.||The members of the partnership commonly share every task.|
A consortium is a partnership between two or more individuals, companies, organizations, or governments (or any combination of these entities) to participate in a common activity. It could also be for pooling resources to achieve a common goal.
A joint venture is a legal organization created by two or more persons to engage in joint economic activity. The parties agree to form a new business by each contributing equity, and they will share in the enterprise’s income, costs, and control. The venture might be for a single project only, there is no equity investment for the partners, and the setup is considerably less rigorous.
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Each member has a legal position in a consortium, and the consortium’s jurisdiction over them is largely limited to activities related to the joint venture, particularly the profit distribution. This is why a consortium is formed only through a contract that spells out each member’s rights and responsibilities. In Joint ventures, each member is responsible for managing every aspect of the partnership. Creating a Joint Venture requires more than a contract but incorporation as legality; this is why Consortiums are popular in non-profit organizations while Joint Ventures are common in profitable businesses.