01 July, 2011

WHAT NATIVE NEEDS TO KNOW ABOUT JV CONTRACT?

Candid thinking:
  • Don't blame yourself if "rurals" become landless; it takes two hands to clap.
  • Don’t blame yourself if next generation Dayaks become “Bangsa Orang Setinggan Sarawak” (BOSS); it takes two hands to clap.
  • Don't blame yourself if "leaders" become powerless; it takes two hands to clap.
  • Don't blame "Government NCR Land Development Program" if "landowners" become poor; it takes two hands to clap.
  • Don’t blame the Government if “policies” are not in your favor; it takes two hand to clap.
  • Don’t blame the Government if “some Dayaks” remain poor, underserved, underdeveloped, underprivileged; it takes two hands to clap.
  • Don't blame anyone if "others" become successful, powerful, in-control and/or rich but yourself.
Now let us focus and discuss on the topic above.

Business Law: Understanding the Contract we are “Signing”, “Seal”, "Binding" and/or “Endorsing”

A joint venture is an association of two or more business entities, who combine and pool their respective expertise, financial resources, skills, experience and knowledge in furtherance of a particular “PROJECT”.

Throughout one's life, Joint Venture contracts are documents that we will enter into, sometimes without really thinking about it.

It is therefore very important to be able to understand a contract and what the contents of it mean and how it will affect you.

It is an agreement between parties that have set out terms and conditions for a specific period that has been agreed too, depending on the individual contract.
Lawyers are the best people to draft contracts or seek legal advise(s) and/or become a "Legal Trust Advisory" or "Native Legal Counsel" or "Native Land Legal Bureau" as they are the most experienced in the field of including what should be included and what should not.

In the past, lawyers included legal terminology and jargon which a lay person had trouble understanding, but now lawyers have learnt to avoid the legal jargon and focus on plain English, but some are still stuck in their ways.

Using legal terminology can mean that contracts are difficult to understand and read and the use of “Latin” terms (example “usufruct rights”) hardly helps the matter either.

Reading a contract therefore can be a very confusing and sometimes stressful thing, so therefore understanding it is crucial before signing anything.

Notes: “usufruct”: The right to use and enjoy the profits and advantages of something belonging to another as long as the property is not damaged or altered in any way.

The requirements of a contract to allow it to be valid and legally binding are important for anyone to get their head round, whether you are drafting a contract or entering into a contract written by another party.

But it must be remembered that not all contracts are in writing and many can be created without needing to be in writing such as purchasing a newspaper from a newspaper stand outside a train station.

Nevertheless, there are still certain requirements that need to be adhered to for the contract to be legally binding.

Firstly, there needs to be intention to form a legal relationship, which is obvious in most contractual agreements.

This means there should be at least two people involved who are able to enter into a binding situation, therefore has to be competent and not a minor (under the age of 18).

Secondly, there needs to be consideration which essentially is the determining factor between a deed (or trust deed or deed of trust) and a contract (or agreement).
In a contract and/or agreement or "Deed of Agreement" both parties to the agreement are required to provide consideration to make it legally binding. Therefore they must contribute something in the contract such as one party giving a service and the other giving money for that service.

Thirdly, there needs to be offer and acceptance. This means that an offer is made and acceptance is given. A contractual relationship will not be binding unless this offer will be specified by one party and the offer has to be accepted by the other party to the agreement.

It is therefore very important that an acceptance is a whole acceptance and is not a partial acceptance, and this type of acceptance will usually represent a counter-offer. It must therefore be remembered that a counter-offer will be required to be approved before the contract has been validated.

I am not a legal expert but a special area of interests, herein wish to share my thoughts and list you with some important guidelines whenever you and/or your teams intended to work on a “Joint-Venture”:

NCR LAND PLANTATION JOINT-VENTURE CONTENTS GUIDELINES

Parties

1. The landowner
2. The investors
3. The Trustee (if any)
4. The Management Company (if any)
5. The Corporate and/or Board of Director structure (if applicable)

Recitals

AGREEMENT GUIDELINES

1. Need for private plantation or estate

(a) Must register NCR land as a private plantation or estate

(b) Conditions precedent

(c) Effect of failure to obtain private plantation land or estate land

2. Joint Venture

(a) Formation

(b) The project

(c) Sale of crop

(d) Shares of joint venture receipts

(e) Estimated shares of joint venture receipts.

(f) Real value of contributions

(g) Dividend payment

(h) Others as it deemed necessary and feasible

3. Term of Joint Venture

(a) Term

(b) Harvest of crop

(c) End of agreement

(d) Returning of land tenure or “60 years leasing tenures agreement”

4. Land and Plantation Management

(a) Reports from consulting expertise

(b) Annual program

5. Joint Venturers' Contributions

(a) The NCR land

(b) Mortgagee's and/or Land lease consent

(c) Project expenses

6. Landowner's Obligations

7. Joint Venturers' Agreements

(a) Commercial venture

(b) Partition

(c) Benefits associated with the crop

(d) Fires & Safety

(e) Insurance

(f) Fencing & Boundaries

(g) Fire breaks

(h) Chemicals

(i) Clean up

(j) Payment of project expenses

(k) Compliance(s) and Comply with law

(l) Others as deem fit and necessary

8. The Plantation Practices Act

(a) Plans under the Act

(b) Notices under the Act

(c) Landowner's rights under the Act

9. Consulting Expertise

(a) Appointment by joint venturers

(b) Replacement

(c) Appointment by independent person

10. Administration of Joint Venture

11. Grazing of NCR Plantation Land

(a) Landowner's rights

(b) Investors' rights

(c) Trustee’ rights (if any)

(d) Government Agent or Intermediary’s right (if any)

12. Joint Venture Relationship

(a) Nature of relationship

(b) Duties to other joint venturers

(c) Unauthorized activity

(d) Indemnity for unauthorized activity

(e) Sharing of liabilities expenses by joint venturers

(f) Liability in tort

(g) Right to compete with joint venture

13. Force Majeure

(a) Application

(b) Notice to other joint venturers

(c) Suspension of obligation

(d) Overcoming Force Majeure

14. Default

(a) Default & Penalty Clause

(b) Suspension

(c) Rights of other joint venturers

(d) Termination of joint venture

(e) Termination of trustee agreement (if any)
15. Transfers

(a) Prohibited

(b) Transfers to family members and/or next-of-kin or proxy or nominee

(c) Transfers to new trustee

(d) Pre-emption provisions

(e) Terms of offer

(f) Acceptance of offer

(g) Permitted transfers

(h) Effective transfer.

16. Dispute Resolution

(a) Reference

(b) Procedure

(c) Expert

17. Power of Attorney

18. Notices

(a) Service

(b) Receipt

(c) Address for service

19. General

(a) Variation and waiver

(b) Invalidity

(c) Giving effect to agreement

(d) Sole or Exclusive agreement

(e) Jurisdiction

20. Definitions

21. Interpretation

The Schedule

1. The parties

2. Share of expenses

3. The value of contributions

4. The Native Customary Right land

5. The Native Rights

6. Miscellaneous

**Hope you enjoy reading it.

Thank you.

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