Joint Venture Agreement (Texas)

JOINT VENTURE AGREEMENT (TEXAS)

Texas-Specific Notice. Under Texas law, a joint venture is treated as a general partnership governed by Chapter 152 of the Texas Business Organizations Code ("TBOC"). Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285 (Tex. 1978); Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009). This means that absent formation of a separate limited liability entity, each Venturer is jointly and severally liable under TBOC § 152.304 for all obligations of the Joint Venture, each Venturer is an agent able to bind the Joint Venture under TBOC § 152.301, and each Venturer owes fiduciary duties of loyalty and care under TBOC §§ 152.204–152.206. The parties are strongly encouraged to consider forming a Texas LLC under TBOC Chapter 101 or a Texas LP under TBOC Chapter 153 to limit personal exposure.

1. PARTIES AND FORMATION

This Joint Venture Agreement ("Agreement") is entered into effective as of [__/__/____] (the "Effective Date") by and between:

Venturer A: [________________________________], a [________________________________] organized under the laws of [____], with its principal office in [________________________________] County, Texas, Texas SOS File No. [________________________________] ("Venturer A"); and

Venturer B: [________________________________], a [________________________________] organized under the laws of [____], with its principal office in [________________________________] County, Texas, Texas SOS File No. [________________________________] ("Venturer B").

2. STRUCTURE ELECTION (CHECK ONE)

☐ Contractual Joint Venture (Texas General Partnership). The parties acknowledge that this structure creates a Texas general partnership under TBOC Chapter 152, subjecting each Venturer to joint and several liability under TBOC § 152.304. No certificate is filed with the Texas Secretary of State. A Statement of Partnership Authority may, but need not, be filed under TBOC § 152.802.

☐ Texas Limited Liability Company. The Venturers shall form "[________________________________] LLC" by filing a Certificate of Formation with the Texas Secretary of State under TBOC § 3.005 and § 101.051, and shall execute a Company Agreement governing internal affairs. The LLC shall be subject to the Texas franchise (margin) tax under Tex. Tax Code Ch. 171 if its annualized total revenue exceeds the no-tax-due threshold (currently $2.65 million for 2026).

☐ Texas Limited Partnership. The Venturers shall form "[________________________________] L.P." by filing a Certificate of Formation under TBOC § 3.011 with a general partner that is a Texas LLC or corporation.

3. PURPOSE OF THE JOINT VENTURE

The purpose of the Joint Venture is limited to: [________________________________]. Under Texas law, acts of a Venturer outside the scope of ordinary Joint Venture business do not bind the Joint Venture without authorization. TBOC § 152.302(b).

4. CAPITAL CONTRIBUTIONS

Venturer A's initial Sharing Ratio: [____]%. Venturer B's initial Sharing Ratio: [____]%.

Additional capital calls require the unanimous written consent of all Venturers under TBOC § 152.202(b); no Venturer may be compelled to make additional contributions absent such consent.

5. MANAGEMENT AND AUTHORITY

5.1 Default Rule Modified. Absent this Section, TBOC § 152.301 would permit any Venturer to bind the Joint Venture for acts apparently in the ordinary course. The parties modify the default rule as follows:

5.2 Management Committee. A Management Committee consisting of [____] representatives appointed by Venturer A and [____] representatives appointed by Venturer B shall manage day-to-day Joint Venture operations. All decisions require the approval of a majority of representatives present, except Major Decisions, which require unanimous written consent.

5.3 Major Decisions (Unanimous Consent Required).
☐ Incurring debt in excess of $[____]
☐ Sale, lease, mortgage, or pledge of any material Joint Venture asset
☐ Admission of additional Venturers
☐ Amendment of this Agreement
☐ Commencement or settlement of litigation seeking more than $[____]
☐ Filing a voluntary bankruptcy petition
☐ Dissolution of the Joint Venture

5.4 Statement of Partnership Authority. If the Venturers elect the contractual joint venture structure, the Venturers may file a Statement of Partnership Authority with the Texas Secretary of State under TBOC § 152.802 to provide public notice of the authority (or restrictions on authority) of each Venturer.

6. FIDUCIARY DUTIES (TBOC §§ 152.204–152.206)

Each Venturer owes the statutory duties of loyalty and care imposed by TBOC §§ 152.204–152.206. The duty of loyalty requires each Venturer to (i) account for any property, profit, or benefit derived from Joint Venture business; (ii) refrain from dealing with the Joint Venture as an adverse party; and (iii) refrain from competing with the Joint Venture in its line of business until dissolution. The parties MAY NOT, by agreement, eliminate the duty of loyalty or the obligation of good faith and fair dealing, although the parties MAY identify specific types and categories of activities that do not violate the duty of loyalty if not manifestly unreasonable. TBOC § 152.002(b).

Identified Permitted Activities (Not a Breach of Loyalty):

• [________________________________]
• [________________________________]

7. ALLOCATIONS AND DISTRIBUTIONS

Unless otherwise required by Treas. Reg. § 1.704-1(b), profits and losses shall be allocated pro rata in accordance with the Sharing Ratios. Distributions of Available Cash shall be made pro rata at least [quarterly/annually]. Texas law (TBOC § 152.203) provides that, absent agreement, each partner is entitled to an equal share, which this Agreement modifies.

8. BOOKS, RECORDS, AND INSPECTION (TBOC § 152.212)

Each Venturer has the statutory right under TBOC § 152.212 to access books, records, and information concerning Joint Venture affairs. Books shall be kept at [________________________________], [____] County, Texas.

9. CONFIDENTIALITY AND TUTSA PROTECTION

All non-public Joint Venture information constitutes "Confidential Information" and, to the extent it meets the statutory definition, a "trade secret" under the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code Ch. 134A ("TUTSA"). Misappropriation is subject to injunctive relief under Tex. Civ. Prac. & Rem. Code § 134A.003, actual damages and unjust enrichment under § 134A.004, exemplary damages up to twice actual damages for willful and malicious misappropriation under § 134A.004(b), and reasonable attorney's fees under § 134A.005.

10. NON-COMPETE AND NON-SOLICITATION

Under Tex. Bus. & Com. Code § 15.50, a covenant not to compete is enforceable only if (i) it is ancillary to or part of an otherwise enforceable agreement at the time made, and (ii) contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than necessary to protect goodwill or other business interest of the promisee. The parties intend that this Section satisfy those requirements.

10.1 During the term and for [____] months following dissolution, neither Venturer shall, within [________________________________] (the "Restricted Territory"), engage in [________________________________].

10.2 Texas Reformation Clause. Under Tex. Bus. & Com. Code § 15.51(c), if a court finds the restrictions overbroad, the court SHALL reform the covenant to the extent necessary to render it reasonable. The parties expressly consent to judicial reformation under § 15.51.

11. DISSOCIATION AND WINDING UP (TBOC §§ 152.501–152.802)

A Venturer is dissociated upon the events listed in TBOC § 152.501, including express will, expulsion, bankruptcy, death, or incapacity. The Joint Venture shall continue and purchase the dissociated Venturer's interest at fair value under TBOC § 152.602, unless a dissolution event under TBOC § 11.051 or § 11.058 occurs. Upon winding up, assets shall be distributed as required by TBOC § 11.053 (creditors, then partners in accordance with positive capital account balances).

12. TAX MATTERS

12.1 Federal Tax Classification. The Joint Venture shall be treated as a partnership for federal income tax purposes unless an entity is formed and a contrary election is made. [________________________________] is designated as the Partnership Representative under IRC § 6223.

12.2 Texas Franchise Tax. If the Joint Venture forms a Texas LLC, LP, or other taxable entity under Tex. Tax Code § 171.0002, it shall timely file Texas Franchise Tax Reports and Public Information Reports with the Texas Comptroller and pay any tax due on the annualized total revenue margin under § 171.101.

12.3 Texas Sales and Use Tax. The Joint Venture shall obtain a Texas Sales and Use Tax Permit from the Comptroller if required under Tex. Tax Code Ch. 151.

13. INDEMNIFICATION

Each Venturer shall indemnify the other and the Joint Venture against Losses arising from such Venturer's gross negligence, willful misconduct, fraud, or breach of this Agreement. The Joint Venture shall indemnify each Venturer for liabilities incurred in the ordinary course of Joint Venture business consistent with TBOC § 152.203(c).

14. DTPA WAIVER (Tex. Bus. & Com. Code § 17.42)

☐ The parties, each being a business consumer represented by legal counsel not selected by the opposing party and not in a significantly disparate bargaining position, knowingly, voluntarily, and in writing WAIVE the protections of the Texas Deceptive Trade Practices–Consumer Protection Act, Tex. Bus. & Com. Code Ch. 17, Subchapter E, to the fullest extent permitted by § 17.42. This waiver does not apply to any claim for which waiver is prohibited by § 17.42(b).

15. DISPUTE RESOLUTION

15.1 Governing Law. This Agreement shall be governed by the laws of the State of Texas without regard to conflicts of law principles. Venue for any action shall lie exclusively in the state district courts of [________________________________] County, Texas, or the United States District Court for the [____] District of Texas, [____] Division.

15.2 Statute of Limitations. The parties acknowledge that Texas imposes a four-year statute of limitations for breach of written contract under Tex. Civ. Prac. & Rem. Code § 16.004.

15.3 Attorney's Fees. The prevailing party in any action to enforce this Agreement shall recover reasonable and necessary attorney's fees and costs under Tex. Civ. Prac. & Rem. Code § 38.001, as amended effective September 1, 2021 to expressly permit recovery against organizations including partnerships, LLCs, and joint ventures.

15.4 Jury Waiver. TO THE FULLEST EXTENT PERMITTED BY TEXAS LAW AND IN COMPLIANCE WITH IN RE PRUDENTIAL INS. CO., 148 S.W.3d 124 (TEX. 2004), EACH VENTURER KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING FROM THIS AGREEMENT.

16. GENERAL PROVISIONS

16.1 Entire Agreement. This document constitutes the entire agreement and supersedes all prior discussions.

16.2 Amendment. Amendments require a writing signed by all Venturers.

16.3 Notice. Notices shall be sent to the addresses above by hand delivery, certified mail, or recognized overnight courier.

16.4 Severability with Texas Reformation. Any unenforceable provision shall be reformed to the minimum extent necessary, consistent with Tex. Bus. & Com. Code § 15.51(c) for restrictive covenants.

16.5 Counterparts; Electronic Signatures. Signatures delivered via PDF or electronic platforms constitute originals under Tex. Bus. & Com. Code Ch. 322 (Texas Uniform Electronic Transactions Act).

17. EXECUTION

Executed effective the date first written above.

VENTURER A: [________________________________]
By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

VENTURER B: [________________________________]
By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

• Tex. Bus. Orgs. Code Ch. 152 (Texas General Partnerships / RUPA): https://statutes.capitol.texas.gov/Docs/BO/htm/BO.152.htm
• Tex. Bus. Orgs. Code Ch. 101 (Texas LLCs): https://statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm
• Tex. Bus. & Com. Code § 15.50 et seq. (Non-Compete): https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm
• Tex. Civ. Prac. & Rem. Code Ch. 134A (TUTSA): https://statutes.capitol.texas.gov/Docs/CP/htm/CP.134A.htm
• Tex. Civ. Prac. & Rem. Code § 38.001 (Attorney's Fees, 2021 amendment): https://statutes.capitol.texas.gov/Docs/CP/htm/CP.38.htm
• Tex. Tax Code Ch. 171 (Franchise Tax): https://statutes.capitol.texas.gov/Docs/TX/htm/TX.171.htm
• Texas Comptroller, 2026 Franchise Tax thresholds: https://comptroller.texas.gov/taxes/franchise/
• Ingram v. Deere, 288 S.W.3d 886 (Tex. 2009) (joint venture = partnership elements)