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Publication Date

Fall 1996

Abstract

When one party is encumbered with a liability, it will often look for another party to assume some of the costs. One method of forcing costs to be shared by another is to have a joint venturer contribute. Not surprisingly, when a liability arises, the liable party will be liberal in its interpretation of who among its relationships is a joint venturer, while a potential contributor will be conservative in its interpretation. Thus, it is important to identify analytical tools to determine if a joint venture exists. The first section of this article discusses the core legal elements of a joint venture and presents basic techniques for determining its existence. The second section discusses the majority view regarding the relationship between joint ventures and the corporations created to effect their purposes; the New York and New Jersey exception (the "Exception") to that view; and the Second Circuit's interpretation of the Exception. Under the Exception, which can potentially determine cost allocation, a valid joint venture and attendant liabilities cease to exist once the joint venture incorporates. The Second Circuit's interpretation has essentially permitted the rule to consume the Exception.

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