In Idaho, two or more people can create legal duties toward one another through their joint actions to make money. A “joint venture” is created when two or more people associate for the purpose of carrying out a business enterprise with the objective of realizing a profit. Costa v. Borges, 145 Idaho 353, 356, 179 P.3d 316, 319 (2008) (quotation omitted). No formal business document has to be created in order for the “joint venturers” to create a fiduciary relationship. The joint venturers do not have to register with the Secretary of State in order to have liability to the other. “[A] joint venture is not an entity separate and apart from the parties composing it.” Costa, 145 Idaho at 357, 179 P.3d at 320 (citation omitted). Through two people’s agreements and course of conduct they can (intentionally or unintentionally) create a business enterprise known as a joint venture, which obligates each with duties that cannot be disregarded or unilaterally altered.
Joint venturers are in a fiduciary relationship. A fiduciary relationship is one where an individual places complete confidence, trust, and reliance in another person who has the fiduciary duty to act for that individual’s benefit. In a joint venture, each venturer owes a fiduciary duty to every other venturer.
As mutual fiduciaries, any action taken by one joint venturer must be for the benefit of the other, and for the benefit of the business. Therefore, a venturer cannot unilaterally change or terminate an agreement between the venuterers. One venturer cannot withhold profits from the other without a mutual agreement. One venturer cannot claim for his own property that was purchased for the business. “Property is presumed to be [joint venture] property if it was purchased with [business] assets.” Costa, 145 Idaho at 358, 179 P.3d at 321. Each joint venturer has legal rights that may be enforced against their fellow venuterers or the joint venture itself. Such claims include, but are not limited to: claims of accounting, breach of contract, breach of fiduciary duties, and breach of the covenant of good faith and fair dealing, etc.
A joint venture cannot continue if even one venturer leaves. “[E]ven if the joint venture had three members it could not continue doing business after the withdrawal of one member. Because ‘a joint venture is not an entity separate and apart from the parties composing it,’ a joint venture cannot continue in business as a separate legal entity after one joint venturer withdraws,” dissociates, or where attempts are made to force a member out of the venture. Costa, 145 Idaho at 357-58, 179 P.3d at 320-21 (internal citation omitted). This means that without all of the members, a joint venture cannot legally continue doing business for a profit.
If you have a great idea to make money and want to partner with someone, give consideration to defining what your business is. Establish the roles of each member. Determine who will get paid what and how. And, agree on what will happen to the business and its members if all does not go as planned. Best approach is to hire an attorney to help in reducing your agreement to writing.