JV Agreements in Georgian Law
A contractual joint venture — where several parties run a common project by contract rather than by creating a new legal person — is written in Georgian law through the Civil Code. Freedom of contract gives the parties the architecture of the agreement, common ownership builds the property layer, agreement on essential terms sets the mandatory barrier, the conditional transaction carries options and milestone triggers, and the assumption of debt resolves the allocation of liabilities. At the same time, an equity joint venture — as an LLC or a JSC — is formed under the current Law on Entrepreneurs: the founders' agreement and the charter live there. The Civil Code carries the contractual JV and its option-exit architecture.
Freedom of Contract and Its Limits
Subjects of private law may, within the limits of the law, freely conclude contracts and determine their content. They may also conclude contracts not provided for by law but not contrary to it — it is on this norm that the JV agreement stands as a construction agreed by the parties. An exception concerns only the case where, for the protection of the essential interests of society or a person, the validity of a contract depends on state permission — then this must be regulated by a separate law. At the same time, a party holding a dominant position on the market bears, in that sphere, the obligation to conclude contracts and may not groundlessly offer non-equivalent terms; nor may a person acting within entrepreneurial activity unjustifiably refuse to contract with persons acquiring goods or services for non-entrepreneurial purposes or vital needs. These rules also discipline the negotiation balance of a joint venture.
Common Ownership — the Layer of Joint Assets
The property foundation of a joint venture is common ownership: it arises as joint and shared ownership, by force of law or on the basis of a transaction. Each co-owner may present claims to third persons in respect of the property in common ownership, and has the right to reclaim a thing only for the benefit of all co-owners. A thing in common ownership may, by agreement of the co-owners, be pledged or otherwise encumbered for the benefit of one of the owners; the costs of maintenance and preservation are borne by the co-owners equally, unless law or contract provides otherwise. The pre-emptive right to acquire a share in common ownership may also be defined by agreement of the parties — in a JV agreement this instrument is the means of controlling the choice of partner.
Essential Terms and Conditional Transactions
A contract is considered concluded where the parties have agreed on all its essential terms in the form provided for it. Essential are the terms on which, at the request of one party, agreement must be reached, or which are deemed such by law — for a joint venture these are contributions, governance, distribution of profit and the exit rules. A contract may also give rise to an obligation to conclude a future contract — a preliminary contract, to which the rule on the same form extends. A transaction is conditional where it depends on a future and unknown event such that either performance is postponed until its occurrence, or the transaction terminates upon its occurrence — on this mechanism the options of a joint venture are built: the exit right upon a specific date or result, the expansion trigger at a financing stage.
Assumption of Debt — Managing Liabilities
The third pillar of a joint venture is the reallocation of obligations. Under a contract concluded with the holder of the claim, a debt may also be assumed by a third person — by assumption of the debt; in that case the third person takes the place of the original debtor. At the same time, the original debtor has the right not to consent to this agreement between the claim holder and the third person and to pay the debt itself. This norm allows a joint project to transfer a specific liability to a partner or a project vehicle without losing the creditor's position.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
Can a joint venture be formed by contract?
Yes — subjects of private law freely conclude contracts within the law, including constructions not provided for by law but not contrary to it.
What is the legal form of joint assets?
Common ownership — joint or shared — arising by force of law or on the basis of a transaction; costs are shared equally unless otherwise agreed.
Which terms are essential?
Those on which agreement is required by a party's request or by law; for a JV typically contributions, governance, distribution and exit.
How is a debt transferred to a third person?
By a contract with the claim holder — assumption of the debt, preserving the original debtor's right not to consent.
How We Help on Legal.ge
Our team will help you with the full draft of a JV agreement — from the model of contributions and governance to options and exit mechanisms. Contact us on Legal.ge — we will build an agreement that places your partnership on a legally sound foundation.