Fillable Printable SAFCEC Joint Venture Agreement

SAFCEC Joint Venture Agreement

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SAFCEC JOINT VENTURE AGREEMENT

JOINT VENTURE AGREEMENT

made and entered into by and between:

……………………………………………………………………………………………………………… of

………………………………………. (hereafter referred to as …………………………………)

of the first part;

and

……………………………………………………………………………………………………………… of

…………………………………… (hereafter referred to as ……………………………………..)

of the second part;

PREAMBLE

WHEREAS the Parties have formed a Joint Venture in order to submit tenders to the

……………………………………………………..……………………………….. for the construction of

…………..………………………………………………………………………………………………. (hereafter

referred to as the "works").

NOW THEREFORE, IT IS AGREED AS FOLLOWS:

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1. FORMATION OF JOINT VENTURE

1.1 The Parties hereby associate themselves into and as a Joint Venture in accordance with the

provisions of this Agreement under the style or firm name of …………………………………….

JOINT VENTURE.

1.2 The Parties hereto agree and undertake that they will not disclose the contents of this Agreement to

persons with whom they may have any dealings directly or indirectly arising from the conclusion of

this Agreement and the operation and establishment of the Works.

1.3 Notwithstanding that the parties may be jointly and severally bound to the

……………………………………., should the Joint Venture be awarded the contract by the

…………………………………………………………… for the construction of the Works, nothing

herein contained shall be interpreted as giving rise to a general partnership between the parties or

limiting the rights or powers of either party to carry on its separate business for its sole benefit.

2. OBJECT AND MOTIVATION

The sole object for which this Joint Venture is established and the sole business of the Joint

Venture is to negotiate for and conclude a contract for the execution of the Works and to carry out

such Works to finality, all in accordance with the terms of this Agreement.

3. PROFITS AND LOSSES

3.1 The profits and losses of the Joint Venture shall be borne by ………………. and ……………. In the

proportions …….% and ……% respectively (hereinafter referred to as "the Specified Proportions").

3.2 In addition to any other provisions contained in this Agreement, the functions, duties, obligations

and responsibilities of …………………………. and …………………………. under this Joint Venture

agreement and in the execution of the Works will be to provide all bridging finance, guarantees and

resources necessary to successfully carry out the project in proportion to the specified proportions,

in which proportions all profits, losses, costs, liabilities and assets and any other responsibilities,

whether pecuniary or otherwise, shall be shared equally, as far as possible.

4 DURATION

The operation of this Agreement shall be deemed to have commenced on the ……. Day of ……….

200…, and shall terminate, except insofar as the provisions of Clauses 5 and 6 apply, upon the

happening of any of the following events, whichever shall be earlier:

4.1 Award of the Contract by ……………………………………… for the construction of the Works to an

outside party or parties, or

4.2 In the case of contract award, at the time the contract is terminated and all rights and obligations of

the parties in connection with such contract and in connection with this Agreement have ceased,

but in no case before the conclusion of any maintenance period in the contract and the cancellation

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and/or refund of all guarantees and bonds. The Joint Venture existence shall also be deemed to

continue insofar as the Joint Venture is responsible for latent defects under the contract.

5. EXCLUSIVITY

The Parties agree and undertake in favour of each other that neither of them shall, except in

accordance with the intention expressed in this agreement, be associated in any manner, either

directly or indirectly, with any investigation, negotiation, tender or proposal for the performance of

or incidental to the execution of the Works and including any variation by way of addition or

omission from the scope of the Works or the extension to the Works, nor invest in any company,

enterprise or partnership in any manner related thereto, either as previously agreed by the

Management Committee in writing.

6. PRE-CONTRACT COSTS

6.1 All costs incurred by the Parties prior to the …… day of ………………….. 200…., shall be for their

own account.

6.2 Costs incurred by the Parties after the ….. day of ………………. 200… and approved by the

Management Committee, shall be borne by the Parties in the Specified Proportions.

7. MANAGEMENT COMMITTEE

7.1 The day-to-day affairs of the Joint Venture shall be under the control of a Management Committee

which shall consist of one representative of each of the parties. Within the terms of this agreement

and the contract, if awarded, each such member shall have full authority to bind the party and/or

parties he represents in all matters relating to the affairs of the Joint Venture.

No party to this agreement may bind the other party hereto without the prior consent of such other

party, nor may the Management Committee bind the Joint Venture or any party beyond the terms of

this agreement or the contract without the prior written consent of both parties.

The parties hereto shall be obliged immediately upon signature of this Agreement, to appoint their

representatives and the first meeting of the Management Committee will be held immediately

thereafter. The parties shall be obliged at all times to maintain a representative on the Management

Committee.

7.2 Each representative on the Management Committee shall be entitled to appoint, and from time to

time remove and replace, an alternate who shall, at any meeting of the Management Committee at

which the representative whom he represents is absent, be vested with all rights and powers and

subject to all obligations of the representative whom he represents.

7.3 The Chairman at meetings of the Management Committee shall be a representative from

……………….. and ……………………… respectively on a six months rotation basis commencing

with .…………………………

7.4 Meetings of the Management Committee shall take place at such times and places as the

Committee shall determine, provided that the Chairman shall be obliged to convene a meeting of

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the Management Committee not later than 10 days after being required to do so by any one of the

parties to this agreement. Not less than five days notice of any meeting of the Management

Committee shall be given to the representatives thereof and their alternates.

7.5 Decisions of the Management Committee shall be unanimous, provided that If the representatives

or the alternates fail to agree on any decision, the meeting at which that decision is sought shall be

adjourned for a period of 24 hours and should the representatives then not agree on the course of

action to be taken the matter shall be referred to the Executive Board for a decision. The decision

of such Executive Board shall be placed before a further adjourned meeting, which shall take place

no later than 72 hours after the initial adjourned meeting, and shall bin the Management Committee

which shall adopt such decision without variation.

7.6 Subject to 7.7 below, decisions o the Management Committee may be reached telephonically,

telegraphically, by facsimile or in writing.

7.7 Decisions of the Management Committee, whether at a meeting or otherwise, shall be recorded in

written minutes which shall be distributed by the Chairman, for the time being to the members of

the Management Committee not later than seven days after those decisions have been taken.

Such minutes shall be deemed to have been affirmed unless dissented from not later than seven

days after they are deemed to have been received by the dissenter.

7.8 The Management Committee may, as it wishes, decide to increase the number of its members for

or invite other parties to attend any of its meetings. Such co-opted members or observers shall not

have a vote.

7.9 The Management Committee shall have the power to delegate such of its powers and duties as it

may determine in the best interests of the parties.

7.10 No remuneration shall be paid by the Joint Venture to the parties' representatives on the

Management Committee in their capacities as such.

7.11 The administrative function regarding the operation of the Management Committee shall be fulfilled

by the Chairman.

8 POWERS OF THE MANAGEMENT COMMITTEE AND DIRECTION OF THE PROJECT

MANAGER

The functions, responsibilities and powers of the Management Committee shall be:

8.1 To appoint the Project Manager who shall be nominated by ……………….. and …………………

and who shall attend all meetings of the Management Committee for the implementation of its

policies and act only in accordance with its directives and its established procedures. The Project

Manager shall be removed in terms of 10 hereof and his successor(s) shall be nominated by

…………………….. and ……………………. And approved by the Management Committee.

8.2 To formulate and dictate to the Project Manager overall policy in regard to the following:

8.2.1 The general day-to-day management of the affairs of the Joint Venture.

8.2.2 Representation of the Joint Venture in dealing with the Resident Engineer/Engineer/Client and

third parties on matters affecting the Joint Venture as a whole.

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8.2.3 Co-ordination of the activities of the parties.

8.2.4 Preparation by agreement with the parties and supervision of the programme of the Works.

8.2.5 Ensuring that the responsibility of each of the parties in regard to technical and contractual

matters is preserved.

8.3 To make such provisions as are necessary to enable the Project Manager to perform his tasks.

8.4 To approve the balance sheets and accounts of the Joint Venture.

8.5 To approve the tender submitted by the Joint Venture and to approve or withhold approval for and

amendment proposed thereto.

8.6 To approve the appointment of legal advisers and auditors where such appointments are

necessary.

8.7 To determine the nature and extend of any additional duties and functions of each of the parties in

relation to this Joint Venture.

8.8 To determine the terms and conditions of employment of personnel as well as emoluments

seconded by the parties to the Joint Venture.

8.9 Subject to the terms and conditions of this agreement, to determine and approve:

8.9.1 The amount and type of working capital requirements of the Joint Venture.

8.9.2 All borrowings, guarantees and like obligations undertaken by the parties to the Joint Venture.

8.9.3 The insurance to be taken out by the Joint Venture.

8.9.4 The nature, method and amount of all claims.

8.9.5 When and in what amount to distribute dividends to the parties hereto, save that any decision

in terms of which the Joint Venture will undertake further work outside of the original scope of

the contract or any variation or amendment of this agreement of the contract, shall require the

unanimous agreement of the parties before becoming effective and binding the Joint Venture.

8.9.6 The approval and appointment of all sub-contractors.

9 THE EXECUTIVE BOARD

9.1 The Executive Board shall consist of one representative of each of the parties who shall be the

Chief Executive Officer of each Joint Venture partner or their nominated deputy but shall not be the

same representative as appointed to the Management Committee in terms of Clause 7.1 hereof.

The Executive Board shall be the mediation authority of the Joint Venture which shall decide on all

issues which are referred to it by the Management Committee as well as on all issues where the

Management Committee is not unanimous.

9.2 Decisions of the Executive Board, whether original decisions or decisions taken after referral from

the Management Committee shall be implemented by the Management Committee as per Clause

7.5.1.

9.3 Decisions of the Executive Board shall be unanimous.

9.4 Effect shall be given to a resolution arrived at unanimously.

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9.5 In the event of the Executive Board not being unanimous in its decision the matter is to be referred

to arbitration in terms of Clause 16 hereof.

9.6 Subject to 9.7 as read in conjunction with 7.7 and, provided that they are unanimous, decisions of

the Executive Board may be reached telephonically, telegraphically or in writing. If reached

telephonically or otherwise orally such decision must be confirmed in writing within 24 hours.

9.7 The Minutes of meetings of the Executive Board shall be handled mutatis mutandis in the manner

per Clause 7.7.

9.8 The administrative functions regarding the operation of the Executive Board shall be fulfilled by the

Chairman of the Management Committee, who shall not be entitled to a voice or a vote at

Executive Board meetings.

10 PERSONNEL

10.1 The Project Manager shall be appointed as provided in Clause 8.1 hereof.

10.2 The person nominated to the office of Project Manager shall be subject to removal from such office

by decision of the Management Committee.

10.3 All the remuneration and emoluments of employment of the Project Manager shall be an expense

of and paid by the Joint Venture, provided that a party shall be entitled by notice in writing delivered

to the other parties to elect that the person to be nominated by it to fill the offices of project Manger

shall be seconded to the Joint Venture in which event the remuneration and emoluments which

would otherwise have been paid to such persons while filling such offices shall be paid to the

member responsible for their nomination or otherwise as such member shall direct and subject to

such payment being duly and promptly paid to the member or its nominee, the member will hold

harmless and keep indemnified the Joint Venture and the other members from all actions,

proceedings, claims and demands by such persons or otherwise howsoever in respect of such

remuneration and emoluments. The remuneration and emoluments to be paid and allowed by the

Joint Venture to the Project Manager shall be determined from time to time by the Management

Committee and borne by the parties hereto in the Specified Propositions.

10.4 The members of the Management Committee and Executive Board and their proxies and

alternates a shall not be employees of the Joint Venture and shall not be entitled to claim any

salary or remuneration from the Joint Venture by virtue of such appointments unless the

Management Committee shall otherwise decide in writing.

10.5 …………………… shall be appointed as Secretaries to the Joint Venture. Save for matters

pertaining to the works and the contract, ……………………. Shall be consulted on all matters of an

administrative and financial nature arising in connection with the business of the Joint Venture

where their particular experience, knowledge, facilities and skills in matters of this nature shall be

considered to be of benefit to the Joint Venture.

11 FINANCING

11.1 Working Capital

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11.1.1 Banking accounts shall be opened in the name of the Joint Venture with banks and at such

places as may be determined by it, and the parties shall be responsible for the payment in the

Specified Properties of such sums to the credit of such baking accounts as shall from time to

time be required by way or working capital for the Joint Venture.

11.1.2 Any amounts from time to time advanced by the parties to the Joint Venture in terms of this

agreement shall be placed to the credit of their respective capital accounts in the Joint Venture.

11.1.3 The banking accounts referred to in sub-clause 11.1.1 hereof shall be operated, and cheques

thereon shall be drawn in accordance with the instructions to the bankers in question.

Withdrawals from these banking accounts shall be effected on the authority of persons

nominated thereto by the Management Committee.

11.1.4 Should any party fail to make payment to the Joint Venture of any amount which it is obliged to

pay in terms of sub-clause 11.1.1 hereof, after the expiry of a period of seven days from the

date of notice requiring it to make such payment, the party to default shall be liable for payment

of interest to the other parties on the amount so withheld at the rate of Prime Bank rate charged

by Joint Venture Bankers per annum should such other parties have advanced the aforesaid

sum.

11.1.5 All revenue derived by the Joint Venture from the contract shall forthwith be deposited to the

credit of the banking accounts referred to in sub-Clause 1.1.1 hereof.

11.1.6 The amount for the time being standing to the credit of the Joint Venture's banking accounts

shall be applied:

11.1.6.1 In discharging the obligations of the Joint Venture in accordance with their tenor; provided that

the Management Committee shall be entitled to require the payment of any liability prior to its

due date if such anticipated payment will result in the allowance by the creditor in question of an

advantageous discount to the Joint Venture for prompt payment;

11.1.6.2 As to any surplus of funds for the time being in the said banking account, subject to the

agreement of the parties as payment to the parties in the Specified Proportions or in proportion

to their participation of the time being in the Joint Venture, save that any such surplus shall first

be utilised for the purpose of eliminating or reducing any disproportion in the ratios of the

parties respective capital accounts.

11.2 Capital and Advances

11.2.1 The amount of capital required by the Joint Venture to attain its object (and which includes all

loans, guarantees, indemnities, reserves) shall be determined from time to time by the

Management Committee, and upon being so determined shall forthwith be contributed by the

parties to the Joint Venture in the Specified Proportions.

11.2.2 If at any time any party to the Joint Venture shall, due to an emergency or with the consent in

writing of the other parties advance any sum of money or to incur any liability on behalf of the

Joint Venture over and above its due contribution to capital, then where money has been

advanced, the same shall be a debt due from the Joint Venture to the party advancing the

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money, and shall be repayable on thirty days' notice and shall bear interest at Prime Bank rate

as charged by Joint Venture's bankers per annum from date of advance to date of payment.

Where a party has incurred a contingent liability on the above basis, the other parties shall,

within thirty days of being requested to do so in writing, relieve such party of its obligations

thereunder to the extent that the obligations of the parties are in the Specified Proportions.

12. ACCOUNTS

12.1 The Joint Venture shall cause proper books of account and complete records to be kept as are

customary in the Republic of South Africa relating to all the assets and liabilities of the Joint

Venture and expenses incurred or income received by the Joint Venture.

Such book and records shall not be related to the affairs of the parties individually. The said books

of account and records, together with all letters, papers or writings concerning or belonging to the

Joint Venture shall be kept at site and such other place from time to time as determined by the

Management Committee, and each of the parties to the Joint Venture shall at all times have free

access and the right to inspect and copy the same.

12.2 Within thirty days of the end of every quarter during the continuance of the Joint Venture, the Joint

Venture shall furnish to the Management Committee all necessary documents such as balance

sheets, profit and loss accounts, bank balances and comparisons with budget and forecasts of

cash flow and profits as are necessary to keep the Management Committee informed of the

financial affairs of the Joint Venture. Every such profit and loss account and balance sheet shall be

agreed to and signed by the members of the Management Committee on behalf of the Joint

Venture members, and when so signed, shall be binding on all the parties, except that if any

manifest error therein be detected and pointed out by any party to the others at any time after such

signature, such error shall forthwith be rectified.

12.3 After the completion of the contract and the release of all bonds, guarantees and obligations given

for the performance of the parties in the Joint Venture, the joint Venture shall procure the

preparation and auditing of a final balance sheet and profit and loss account, which shall be

approved by the Management Committee, and from which the final profit and loss sustained by the

Joint Venture shall be ascertained, and distributed to or contributed by the parties in proportion to

their participation in the Joint Venture. This clause shall not be construed as prohibiting the interim

distribution of profits or contribution towards losses in the discretion of the Management

Committee.

13. WINDING UP

Upon the determination of the Joint Venture in accordance with the provisions of this agreement, a

full and general account shall be taken of the assets and liabilities of the Joint Venture and of the

transactions and dealings thereof, and with all convenient speed, such assets shall be sold and

realised and the proceeds applied in paying and discharging such liabilities and the expenses of

and incidental to the winding-up of the Joint Venture affairs and thereafter in paying to each Joint

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Venture member its share of such proceeds in the Specified Proportions. The Joint Venture

members respectively undertake to do all such things as may be necessary so as to give effect to

the above.

14. BREACH

14.1 If a party ("the guilty party") shall commit a breach of any material provision of this agreement, and

fail to remedy the same within a period of thirty (30) days after the receipt by it of written notice

requiring it to do so, or be placed in liquidation or under judicial management, whether provisionally

or finally, or propose any compromise with its creditors, the other parties ("the aggrieved parties")

shall have the right, without prejudice to any of its other remedies arising from such breach,

forthwith to terminate this agreement, in which event:

14.2 The guilty party's interest in the joint venture shall be taken over by the remaining parties. The

aggrieved parties shall, in addition, have the right, if it so requires, to take over the capital account

of the party in default.

Such capital account shall be valued on the basis of the nett assets revealed in an audited balance

sheet and profit and loss account prepared as at the end of the month in which the default or other

breach occurred; provided that the profit and loss account shall take into account the Joint

Venture's share in the valuation of the work in progress, as shown in the Joint Venture accounts, at

the date of preparation of the balance sheet and profit and loss account, after providing for any

known or contemplated future losses to be incurred on the work undertaken or to be undertaken by

the Joint Venture and provided further that should upon the completion of the contract or contracts,

the provision for losses made in the valuation or work in progress as aforesaid prove to be

incorrect, such provisions shall be adjusted. Provided the aggrieved parties have proved that the

tender rates as escalated from time to time were inadequate, the guilty party shall be liable to the

extent of the participation of such party for all losses incurred on the whole of the contract,

including any losses incurred subsequent to the termination of the agreement in accordance with

these provisions, but such party shall not be entitled to share in any profits earned subsequent to

such termination.

14.3 The aggrieved parties shall have the right to recruit in its employment personnel seconded to the

Joint Venture by the guilty party and, as a stipulation in favour of such personnel, the guilty party

waives any claims it might otherwise have had against such personnel arising from their summary

termination of their employment with the guilty party.

14.3 All plant hired by the guilty party to the Joint Venture shall remain on hire to and under the control

of the aggrieved parties until the completion of the contract, or until the aggrieved parties shall

release such plant from the operation of this sub-clause. Payment shall be made thereof monthly.

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15. DISPUTES

15.1 Having regard to the high degree of good faith which must exist between the parties, the parties

agree to do their utmost to ensure that the disputes between them are settled equitably and

amicably and where possible without resort to arbitration.

15.2 In the event of any differences or dispute of whatever nature arising from this agreement (which

shall include any failure to agree on any matter which requires the parties' agreement for the

purposes of implementation of this agreement) or any other matter related thereto which cannot be

settled by direct negotiation between the parties, such differences or dispute shall be referred to

arbitration in terms of Clause 16 hereof.

16 ARBITRATION

16.1 Save as hereinafter provided, any dispute at any time between any of the parties hereto in regard

to any matter arising out of this agreement or its interpretation or rectification shall be submitted to

and decided by arbitration.

16.2 The arbitration referred to in 16.1 shall be held -

16.2.1 At …………………………………

16.2.2 In a summary manner, i.e. on the basis that it shall not be necessary to observe or carry out

either -

16.2.2.1 the usual formalities or procedure (e.g. there shall not be any pleadings or discovery); or

16.2.2.2 the strict rules of evidence.

16.2.3 Immediately and with a view to its being completed within twenty-one business days after it is

demanded;

1965 or the Republic of South Africa as amended from time to time).

16.3 The Arbitrator shall be, if the question in issue is -

16.3.1 Primarily an accounting matter, an independent accountant;

16.3.2 Primarily a legal matter, a practising Senior Counsel of not than five years standing as such;

16.3.3 Any other matter, an independent person unanimously agreed upon between the parties and

failing agreement appointed by the President for the time being of the South African Federation

of Civil Engineering Contractors.

16.4 If agreement cannot be reached within seven business days after the arbitration has been

demanded as to whether the question in issue falls under 16.3.1, 16.3.2 or 16.3.3, then a practising

Senior Counsel of not less than five years' standing as such agreed upon between the parties, and

failing agreement appointed by the President for the time being of the ………………………. Society

of Chartered Accountants as soon as possible thereafter, shall determine whether the question in

issue falls under 16.3.1, 16.3.2 or 16.3.3 so that an arbitrator can be appointed and the arbitration

can be held and concluded, if possible, within the prescribed period of twenty-one days.

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16.5 The arbitrator shall decide the matters submitted to him according to what he considers just and

equitable in the circumstances and, therefore, the strict rules of law need not be observed or be

taken into account by him in arriving at his decision.

16.6 The parties irrevocably agree that the decision in those arbitration proceedings -

16.6.1 shall be binding on them;

16.6.2 shall be carried into effect;

16.6.3 can be made an order of any court of competent jurisdiction.

17. CONFIDENTIALITY

17.1 All matters relating to this agreement, any negotiations and the contract for the construction of the

Works resulting therefrom shall be regarded by the parties hereto as being highly confidential, and

shall not be disclosed without prior written consent of the management Committee to any party,

person or entity who or which is not a signatory to this Agreement, except where such disclosure is

necessary for the fulfilment of this Agreement.

No party shall at any time hereinafter use any technical information, save that in the public domain,

acquired from the other parties hereto except for the purposes of fulfilment of the contract.

17.2 No party shall have the right to advertise, or otherwise permit, the dissemination of publicity

concerning its participation in the Joint Venture unless:

17.2.1 the relevant material shall make due reference to and acknowledgement of the work of he other

parties;

17.2.2 the relevant material shall, for its dissemination is within the control of the party in question,

have been approved by the other parties, which approval shall not be unreasonably withheld.

18. ASSIGNMENT

18.1 No party shall cede, assign or in any other way make over any of its rights or obligations under this

agreement without the written consent of the other parties except insofar as such assignment or

alienation is to any wholly-owned subsidiary company of that party.

18.2 In the event of such assignment or alienation taking place, the initial party shall jointly and severally

and in solidum guarantee the obligations or the assignee towards the remaining parties.

19 GENERAL

19.1 No party shall have a claim against the other parties arising out of a failure to secure the contract,

except insofar as the parties are liable to bear the joint venture expenses in the Specified

Proportions.

19.2 Any changes and supplementary provisions concerning this agreement shall require the written

approval of all the parties hereto.

19.3 Variations not effective unless in writing

No variation, modification or waiver of any provision of this agreement, or consent to any departure

therefrom, shall in any event be of any force or effect unless unanimous and confirmed in writing