Is there a contract that we should have signed prior to discussing a joint venture?

Full question:

Is there a contract that we should have signed prior to discussing the particulars in a joint venture relationship. We are the 'small' company looking at working with a 'large' company. If yes, what type of contract? We reside in Montana but the business will be in Arizona.

• Category: Intellectual Property
• Date: 04/07/2025
• State: Montana

Answer:

The answer will depend on all the facts and circumstances involved. Generally, there are some common contracts that are used to protect intellectual property when business negotiations are ongoing. A memorandum of understanding (MOU) may be used as a confirmation of agreed upon terms when an oral agreement has not been reduced to a formal contract. It may also be a contract used to set forth the basic principles and guidelines under which the parties will work together to accomplish their goals. I suggest you consult a local attorney who can review all the facts and documents involved.

The intangible assets of a business include not only its trade name and other identifying trade devices but also its inventions, creative works, and artistic efforts. Broadly defined as trade secrets, this body of commercial information may consist of any formula, pattern, process, program, tool, technique, mechanism, or compound that provides a business with the opportunity to gain an advantage over a competitor. Although a trade secret is not patented or copyrighted, the law of unfair competition awards individuals a property right in any valuable trade information they discover and attempt to keep secret through reasonable steps

The owner of a trade secret is entitled to its exclusive use and enjoyment. A trade secret is valuable not only because it enables a company to gain advantage over a competitor, but also because it may be sold or licensed like any other property right. On the other hand, commercial information that is revealed to the public, or at least to a competitor, retains limited commercial value. Consequently, courts vigilantly protect trade secrets from disclosure, appropriation, and theft. Businesses may be held liable for any economic injuries that result from their theft of a competitor's trade secret, as may other opportunistic members of the general public. Employees may be held liable for disclosing their employer's trade secrets, even if the disclosure occurs after the employment relationship has ended.

Informal trade relations that have not been reduced to contractual terms are also protected from outside interference by the law of unfair competition. Businesses are forbidden from intentionally inflicting injury upon a competitor's informal business relations through improper means or for an improper purpose. Improper means include the use of violence, undue influence, or coercion to threaten competitors or intimidate customers. For example, it is unlawful for a business to blockade an entryway to a competitor's shop or impede the delivery of supplies with a show of force. The mere refusal to deal with a competitor, however, is not considered an improper means of competition, even if the refusal is motivated by spite.