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Thread: Joint Venture, in the tender environment and contracts that manifest

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    Joint Venture, in the tender environment and contracts that manifest

    The tender process which is regulated by various legislation, is the process of entering into various contracts to maintain and improve infrastructure and assets. It’s the way the public sector receives a wide array of goods and services from the private sector.
    The procurement process starts with section 217 of the Constitution of 1996 which provides

    When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is-: equitable, transparent, competitive and cost-effective.
    The Constitution has also called for legislation to be put into place to facilitate this need.

    The legislation is The Preferential Procurement Regulations 2017.

    Section 9 of this Act encouraging sub-contracting as a form of business empowerment:

    Section 9 provides as follows:

    Subcontracting as condition of tender
    9.(1) If feasible to subcontract for a contract above R30 million, an organ of state
    must apply subcontracting to advance designated groups.
    (2) If an organ of state applies subcontracting as contemplated in subregulation
    (1), the organ of state must advertise the tender with a specific tendering condition that the
    successful tenderer must subcontract a minimum of 30% of the value of the contract to-
    (a) an EME or QSE;

    Joint Ventures feature a great deal in the Tender environment. A Joint venture occurs when two or more companies or persons agree to contribute in capital or skill to a specific enterprise. Various entities, natural and juristic such as companies and corporations, partnerships, etc. enter into a multi-lateral agreement. Natural and juristic parties such as companies, corporations, partnerships, and other business enter into a multi- lateral agreement to form a Joint venture.

    A joint Venture could come together for a specific Tender or Request for Proposal.
    So, from the law of contract perspective, a joint venture comprises two or more persons, natural or juristic, who enter into agreement to work together for a common purpose, a specific Tender or Request for Proposal, a tender essentially.
    Large, medium and small businesses, with a common purpose, commit to various projects in the Tender environment. By nature, there will be various agreements. All will address. Certain clauses will be share expenses, Income Tax, Ownership


    There following are the most common contracts:

    1)Memorandum of understanding;

    2)Joint venture agreement (unincorporated) to tender for a contract to supply goods;

    3)Joint venture agreement (unincorporated) to implement a design and construction ;

    4)contract following a tender award (parties share equally in risk);

    5)Joint venture agreement (unincorporated) to implement construction contract following a tender award (share of risk not equal)
    Last edited by Vanash Naick; 27-May-19 at 12:54 PM.
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