Unincorporated Joint Ventures In New Zealand: Legal Overview

If you’re teaming up with another business to deliver a project, launch a product, or tender for a contract, you might be thinking about a joint venture. And if you don’t want the cost and admin of setting up a new company together, an unincorporated joint venture can look like the perfect middle ground.

But “simple” doesn’t mean “risk-free”. In New Zealand, the legal consequences of collaborating without a separate entity can be significant - especially around liability, tax, decision-making, intellectual property, and what happens when things change (or go wrong).

This guide breaks down what an unincorporated joint venture is, how it’s different from other structures, and what you should lock in legally so you’re protected from day one.

What Is An Unincorporated Joint Venture?

An unincorporated joint venture is a collaboration where two (or more) parties work together on a defined project or business activity, without creating a separate legal entity (like a company or incorporated partnership) to run it.

In practical terms, that usually means:

• each party keeps operating their own business as normal;
• you agree to share resources, responsibilities, profits (or revenue), and risks for a specific purpose;
• the relationship is governed mainly by contract (your joint venture agreement); and
• the joint venture typically has a start date, a defined scope, and an end point (or exit mechanism).

Unincorporated joint ventures are common in project-based industries like construction, professional services, property, events, and technology - basically anywhere two businesses can achieve more together than separately.

That said, if you don’t document the deal properly, your “joint venture” can accidentally start looking like something else legally (like a partnership), and that can create liability you didn’t plan for.

Unincorporated Joint Venture Vs Partnership: Why The Difference Matters

This is one of the biggest legal traps for small businesses.

In everyday conversation, people use “joint venture” and “partnership” interchangeably. Legally, though, the difference matters because partnerships can create automatic obligations and liability in ways an unincorporated joint venture (with the right structure and documents) is usually trying to avoid.

Why You Don’t Want An “Accidental Partnership”

If your arrangement meets the legal definition of a partnership, you may be treated as partners even if you never used the word “partnership” anywhere. That can mean:

• joint and several liability (one party can be on the hook for the other party’s debts in some situations);
• each party potentially having authority to bind the other to contracts;
• disputes about who owns what (especially IP and customer relationships); and
• messy exits if one party wants out early.

A well-drafted unincorporated joint venture agreement usually aims to make it clear that:

• you’re collaborating for a defined project or scope;
• you are not carrying on business “in common” as partners; and
• each party stays responsible for their own business unless you expressly agree otherwise.

However, it’s important to know that whether your arrangement is treated as a partnership can depend on the overall substance of the relationship (including how you operate in practice) - not just what your contract calls it. Clear drafting and disciplined conduct both matter.

If your arrangement is broader, ongoing, and looks like you’re running one combined business together, it might be worth considering a different structure (including an incorporated joint venture using a company). That’s where tailored advice can save you a lot of pain later.

When Does An Unincorporated Joint Venture Make Sense For Small Businesses?

From a small business perspective, an unincorporated joint venture often makes sense when you want to collaborate but keep things lean.

It’s particularly common when:

• You’re bidding on a job together (for example, one party brings the licence/experience and the other brings staff or equipment).
• You’re delivering a defined project with a clear scope, milestones, and timeline.
• You want flexibility (you’re testing a market or a working relationship before committing to a more permanent structure).
• You want to keep separate branding while cooperating behind the scenes.
• You want to avoid the ongoing compliance of running a new entity (such as a new company with directors, shareholder decisions, and separate accounting).

In many cases, the “right” structure isn’t just about what’s easiest today - it’s about whether it will still work when:

• the project grows;
• you hire people;
• you bring on subcontractors;
• you start taking customer payments; or
• you invest real money into tools, software, or IP.

If you can see the joint venture becoming an ongoing business (not just a single project), it may be worth considering whether a company structure (with a Company Constitution and shareholder rules) would give you clearer protection.

What Should Be In An Unincorporated Joint Venture Agreement?

Because an unincorporated joint venture doesn’t have its own “entity rules”, your contract is doing most of the heavy lifting. This is why having the agreement drafted properly (not pulled from a generic template) matters so much.

Here are the key terms you’ll usually want to cover.

1) Scope, Purpose And Deliverables

Be very clear about what you’re doing together - and what you’re not doing together. A good agreement will define:

• the project or business activity;
• who the client/customer is (if applicable);
• deliverables, milestones and deadlines;
• what “success” looks like (and what happens if it isn’t achieved).

2) Contributions: Who Brings What?

This is where misunderstandings often start. Spell out:

• cash contributions (if any);
• equipment, vehicles, or premises being provided;
• staff time and roles;
• access to software, tools, or systems;
• who pays which expenses (and when).

If one party is “fronting” costs and being reimbursed later, you’ll want the reimbursement process clearly documented.

3) Management, Decision-Making And Deadlocks

Even friendly collaborations can stall when there’s a disagreement. Your agreement should address:

• who manages day-to-day operations;
• what decisions require unanimous approval vs majority approval;
• who can sign contracts and commit expenditure;
• what happens if you can’t agree (deadlock resolution).

This is especially important if the JV is dealing with third parties (suppliers, customers, subcontractors) where delays can cost real money.

4) Money: Revenue, Profit Share, Invoicing And Payment Timing

In an unincorporated joint venture, there are a few common ways money can flow, for example:

• one party invoices the customer and pays the other party their agreed share; or
• each party invoices for their portion of the work; or
• payments are pooled and distributed under an agreed formula.

Whichever model you use, your agreement should cover:

• how revenue is calculated (including GST treatment);
• what expenses are deducted before profit share;
• when payments must be made between the parties;
• record-keeping and audit rights (so everyone can verify numbers); and
• what happens if a customer doesn’t pay.

Tax and GST treatment can get complex and will depend on how the JV is set up and invoicing is handled, so it’s worth confirming the right approach with your accountant or tax adviser.

If what you really need is a commercial split of proceeds rather than a full JV structure, a Revenue Share Agreement can sometimes be a cleaner fit - it depends on your setup and risk profile.

5) Liability, Insurance And Risk Allocation

This is where small businesses can get caught out.

Because there’s no separate legal entity, liability often sits with the parties directly. Your contract should deal with:

• who is responsible for which risks (for example, workmanship, professional advice, supply delays);
• what insurance each party must maintain;
• indemnities (who covers who if a claim arises); and
• limitation of liability (where appropriate and enforceable).

There’s no one-size-fits-all approach here - the “right” risk allocation depends on what each party is doing and who is best placed to control each risk.

6) Intellectual Property (IP) And Confidentiality

IP issues can quietly become the most valuable (and most disputed) part of a joint venture.

Your agreement should clearly address:

• what IP each party brings into the JV (and that it remains theirs);
• what new IP is created during the JV (and who owns it);
• what licence rights each party has to use the other party’s IP during the project;
• what happens to the IP when the JV ends; and
• confidential information obligations.

Depending on the nature of the work, you might need a separate IP Licence (for example, if one party is allowing the other to use software, content, branding, or systems).

It’s also common to include (or pair with) a Non-Disclosure Agreement early in discussions, especially before you share pricing, customer lists, or processes.

7) People: Contractors, Employees And Health & Safety

If your joint venture involves people doing work (especially on-site), you’ll want to think about:

• who employs the workers (if any);
• who engages and pays contractors;
• who is responsible for supervision and performance;
• who handles compliance with workplace obligations.

If you’re hiring or assigning staff to do JV work, it’s worth making sure your Employment Contract settings align with what you’ve promised the other party (and what you’re promising the customer).

On the health and safety side, New Zealand’s Health and Safety at Work Act 2015 can apply broadly, and duties can overlap between businesses working together. Your JV agreement won’t replace those obligations, but it can allocate responsibilities clearly so things don’t fall through the cracks.

8) Term, Exit Rights And What Happens If Things Change

Even if you start with the best intentions, circumstances change. A good unincorporated joint venture agreement will cover:

• how long the JV runs (fixed term, project completion, or ongoing);
• termination rights (for breach, insolvency, non-performance, or convenience);
• what happens if one party wants to exit early;
• handover obligations;
• what happens to customer contracts, work-in-progress, and payments; and
• restraints around poaching customers or staff (if appropriate).

This part is especially important if one party has direct access to the customer relationship and the other party is “behind the scenes”.

Key Legal And Compliance Issues To Keep On Your Radar

Beyond the JV agreement itself, your joint venture may trigger other legal requirements depending on how you operate.

Consumer And Marketing Rules

If the joint venture is selling to customers (particularly consumers), you’ll likely need to comply with the Fair Trading Act 1986 (misleading or deceptive conduct, advertising claims) and the Consumer Guarantees Act 1993 (consumer rights around faulty goods/services).

Even if only one JV party is “front-facing”, both parties can be affected if something goes wrong - so make sure your agreement clearly allocates responsibility for customer promises, warranties, refunds, and complaint handling.

Privacy And Data Handling

If you collect customer information (names, emails, addresses, payment details), you’ll need to comply with the Privacy Act 2020.

A practical question to ask early is: who is collecting the data, where is it stored, and who can access it?

If your JV uses a shared platform, mailing list, booking system, or CRM, it’s usually sensible to align on a Privacy Policy and to document how data is shared between the parties.

Competition And Conflicts

Sometimes, joint ventures involve businesses who are also competitors (or who might compete later). That’s where you’ll want to be especially careful about:

• conflicts of interest;
• information barriers (what can be shared and with whom);
• pricing discussions and tender rules (particularly if you operate in regulated procurement environments); and
• restraint clauses (to protect goodwill, while keeping them reasonable and enforceable).

This doesn’t mean you can’t collaborate - it just means you should define boundaries clearly and keep communications disciplined.

Should You Use An Unincorporated Or Incorporated Joint Venture?

This is the big strategic question. The right answer depends on your goals, risk, and how long you expect the arrangement to last.

An Unincorporated Joint Venture Might Suit You If:

• the project is short-to-medium term with clear scope;
• you want to keep costs and admin low;
• each party can manage their own responsibilities separately; and
• you want flexibility to exit after the project ends.

An Incorporated Joint Venture Might Suit You If:

• you’re building a long-term venture together (not just a one-off project);
• you need a dedicated vehicle to hire staff, sign contracts, and hold assets;
• you’re investing significant capital and want formal governance; or
• you want clearer separation of liability (noting this still depends on guarantees and how the venture is operated).

If you do go down the incorporated route, you’ll often need shareholder rules and governance documents so expectations are crystal clear - in many cases that includes a Shareholders Agreement.

Either way, the aim is the same: clarity upfront, so you can focus on delivering the work and growing the opportunity (instead of untangling misunderstandings later).

Key Takeaways

• An unincorporated joint venture lets you collaborate with another business without forming a new legal entity, but your legal protection relies heavily on having the right contract in place.
• If your arrangement isn’t documented properly (and managed consistently in practice), you risk creating an accidental partnership, which can lead to unexpected liability and disputes.
• A strong joint venture agreement should cover scope, contributions, decision-making, money flow, liability, insurance, IP ownership, confidentiality, and clear exit/termination rules.
• Don’t forget related compliance areas that often come up in joint ventures, including the Fair Trading Act 1986, Consumer Guarantees Act 1993, Privacy Act 2020, and health and safety obligations.
• Unincorporated joint ventures often suit defined projects; if you’re building something ongoing with shared assets and staff, an incorporated structure may be more appropriate.
• Getting the legal foundations right from day one can help you protect the relationship, reduce risk, and make the venture easier to scale.

If you’d like help setting up an unincorporated joint venture agreement (or figuring out whether a different structure would suit you better), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.