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PARTICIPATION ASSOCIATION CONTRACT (Joint Venture Agreement)
In the city of _______, on _______.
PARTICIPATION ASSOCIATION CONTRACT ENTERED INTO BY AND BETWEEN, ON ONE PART, AS THE ASSOCIATE:
_______, of _______ nationality, of legal age, with address at _______, neighborhood _______, _______;
AND ON THE OTHER PART, AS THE ASSOCIATING PARTY:
_______, of _______ nationality, of legal age, with address at _______, neighborhood _______, _______;
WHO MUTUALLY AND EXPRESSLY ACKNOWLEDGE THEIR FULL CAPACITY TO ENTER INTO THIS CONTRACT AND TO BE BOUND BY ITS TERMS; HEREINAFTER, COLLECTIVELY OR INDIVIDUALLY, THEY SHALL BE REFERRED TO AS "THE PARTIES"; THE FIRST AS "THE ASSOCIATE" AND THE SECOND AS "THE ASSOCIATING PARTY" AND INDIVIDUALLY AS "THE PARTY". ACCORDINGLY, "THE PARTIES" FIRST STATE THE FOLLOWING:
I. "THE ASSOCIATE" DECLARES, UNDER OATH OF TRUTHFULNESS:
a) That it has an interest in participating in the commercial venture subject to this contract, through the contributions established herein, with the purpose of sharing in the economic results generated by said venture.
b) That it has the resources, assets, rights, or knowledge necessary to make the contributions agreed upon in favor of the joint venture, which are described in this contract.
c) That the contributions it will make are its legitimate property or are under its lawful disposal, and therefore it has full authority to allocate them to the fulfillment of the purpose of this agreement.
d) That it acknowledges that, according to the legal nature of the Participation Association, its participation shall be limited to the rights and obligations set forth in this contract, with no representation vis-à-vis third parties and no direct legal relationship with them.
II. "THE ASSOCIATING PARTY" DECLARES, UNDER OATH OF TRUTHFULNESS:
a) That it has an interest in carrying out and exploiting the commercial venture subject to this contract, in its capacity as Associating Party.
b) That it possesses the knowledge, experience, operational structure, or means necessary to administer and direct the commercial venture subject to this contract.
c) That it acknowledges and accepts the participation of "THE ASSOCIATE" in the commercial venture through this Participation Association, under the terms and conditions established in this instrument.
d) That it shall be solely responsible to third parties for all acts, contracts, operations, and management activities carried out in connection with the exploitation of the commercial venture subject to this contract.
THE PARTIES being in agreement with the foregoing, having full knowledge of the content of the declarations set forth above, which they ratify as true, and there being no error, fraud, duress, bad faith, or any vice of consent that could invalidate it, they freely and voluntarily agree to bind themselves and to comply with the following:
FIRST. OBJECT.
The purpose of this contract is to establish a Participation Association whereby "THE ASSOCIATING PARTY" shall carry out, manage, and exploit, in its own name and under its sole responsibility to third parties, the commercial venture described below:
_______.
SECOND. CONTRIBUTIONS OF THE ASSOCIATE.
For the fulfillment of the object of this contract, "THE ASSOCIATE" undertakes to contribute to the joint venture the following assets:
_______.
The assets described above are exclusively allocated to the development of the commercial venture and may include, by way of illustration but not limitation, money, movable property, equipment, machinery, tools, materials, inventories, rights of use, intellectual property rights, or any other asset susceptible to economic exploitation.
"THE ASSOCIATE" declares that the contributed assets are its legitimate property or are under its lawful disposal, free of liens, encumbrances, or any third-party rights that could affect their use for the purposes of this contract.
Unless expressly agreed otherwise, the contributed assets shall not imply a transfer of ownership to "THE ASSOCIATING PARTY"; rather, they shall be exclusively used for the development of the commercial venture during the term of this contract.
"THE ASSOCIATING PARTY" shall be responsible for administering and using the contributed assets for the fulfillment of the purpose of this contract, always acting in its own name vis-à-vis third parties.
THIRD. ECONOMIC PARTICIPATION OF THE ASSOCIATE.
By virtue of the contributions made by "THE ASSOCIATE" in accordance with the preceding clause, "THE ASSOCIATING PARTY" undertakes to grant "THE ASSOCIATE" an economic participation derived from the results of the exploitation of the commercial venture.
For such purposes, "THE PARTIES" agree that "THE ASSOCIATE" shall be entitled to receive _______% of the net profits generated from the exploitation of the commercial venture during the term of this contract.
The aforementioned participation constitutes the economic share corresponding to "THE ASSOCIATE" for its involvement in the joint venture, derived from the contributions made under this contract.
"THE PARTIES" expressly acknowledge that the said economic participation: a) Does not constitute wages, salary, fees, or any form of labor remuneration, nor does it create an employment relationship; b) Derives exclusively from "THE ASSOCIATE"'s participation in the economic results; c) Shall be paid by "THE ASSOCIATING PARTY" out of the profits or results generated.
"THE PARTIES" establish that the determination and distribution of profits shall be made on a _______ basis, based on the results generated during the corresponding period.
FOURTH. PARTICIPATION IN LOSSES.
Unless expressly agreed otherwise, "THE ASSOCIATE" shall only participate in losses, if any, generated from the exploitation of the commercial venture up to the amount of _______% of its contributions, and no further liability may be claimed from it.
FIFTH. DETERMINATION OF RESULTS.
The accounting of the commercial venture shall be kept by "THE ASSOCIATING PARTY", which shall determine the profits or losses derived therefrom in accordance with generally accepted accounting principles and the financial information reasonably available in the ordinary course of operations.
"THE ASSOCIATING PARTY" shall provide "THE ASSOCIATE", upon reasonable request, with general information and sufficient supporting documentation regarding the results of the commercial venture that serve as the basis for calculating the corresponding economic participation.
SIXTH. RIGHT TO INFORMATION.
"THE ASSOCIATE" may reasonably request, with reasonable frequency, general information and supporting documentation from "THE ASSOCIATING PARTY" related to the operation of the commercial venture, to the extent necessary to verify the calculation of its economic participation under this contract, without this implying any administrative powers, direct intervention in the operation, or representation vis-à-vis third parties.
SEVENTH. TERM.
This contract shall enter into force on the date of its signature and shall remain in effect until _______, unless terminated earlier as provided herein.
During the term of this contract, "THE PARTIES" undertake to fulfill all obligations and commitments assumed, for the purpose of adequately developing the commercial venture subject to this joint venture.
Upon expiration of the said term, "THE PARTIES" may agree to renew or extend this contract by executing a written amendment agreement. Renewal or extension shall not be automatic and must be expressly stated in writing and signed by "THE PARTIES".
EIGHTH. OBLIGATIONS OF THE ASSOCIATE.
For its part, "THE ASSOCIATE" assumes the following obligations, in addition to the contributions mentioned above:
a) To make and maintain, under the agreed terms, the contributions in its charge in accordance with this contract.
b) To refrain from disposing of, encumbering, affecting, or compromising the contributed assets in a manner detrimental to the commercial venture, except with express contrary agreement.
c) To reasonably cooperate with "THE ASSOCIATING PARTY" as necessary for the proper development of the commercial venture, without assuming management functions or representation vis-à-vis third parties.
d) To maintain confidentiality regarding the information to which it has access by reason of this contract, under the terms established herein.
e) To refrain from performing acts or omissions that materially affect the operation, reputation, or viability of the commercial venture.
f) To promptly inform "THE ASSOCIATING PARTY" of any circumstance that may materially affect its contributions or the fulfillment of its obligations.
g) The following additional obligations: None (as left blank in the original contract).
NINTH. OBLIGATIONS OF THE ASSOCIATING PARTY.
In addition to the payment of the economic participation indicated above, "THE ASSOCIATING PARTY" assumes the following obligations:
a) To administer, direct, and exploit the commercial venture with the diligence of a good merchant.
b) To allocate the contributions made by "THE ASSOCIATE" exclusively to the fulfillment of the purpose of this contract.
c) To maintain accounting and administrative control of the commercial venture in accordance with applicable legal and tax provisions.
d) To determine in good faith the results of the commercial venture and to pay "THE ASSOCIATE" the economic participation agreed herein in a timely manner.
e) To provide "THE ASSOCIATE", under the terms set forth herein, with the information reasonably necessary to verify the calculation of its economic participation.
f) To comply with the tax, administrative, regulatory, and commercial obligations applicable to the commercial venture.
g) To keep, during the term of this contract, the documentation and information reasonably necessary to evidence the operation of the commercial venture and the determination of its results.
h) The following additional obligations: _______.
Furthermore, "THE ASSOCIATING PARTY" shall be solely responsible to third parties for all acts, operations, contracts, and management activities relating to the joint venture and the commercial venture subject to this contract.
TENTH. NATURE OF THE CONTRACT.
"THE PARTIES" acknowledge and expressly agree that this contract constitutes a commercial Participation Association (Joint Venture), entered into pursuant to Articles 252 to 259 of the Mexican General Law of Commercial Companies.
Consequently, "THE PARTIES" acknowledge that this association: a) Does not constitute a commercial company with its own legal personality; b) Shall be exploited exclusively by "THE ASSOCIATING PARTY" in its own name vis-à-vis third parties; c) Implies solely "THE ASSOCIATE"'s participation in the economic results.
Likewise, "THE PARTIES" expressly acknowledge that no employment relationship exists between "THE ASSOCIATING PARTY" and "THE ASSOCIATE", nor any legal subordination, economic dependency, work schedule, or obligation to pay wages, employee benefits, or social security.
ELEVENTH. TERMINATION FOR BREACH.
This contract may be terminated without the need for prior judicial declaration, upon written notice to the other party, upon the occurrence of specified causes.
I. Causes for termination without liability to "THE ASSOCIATE":
a) Total or partial non-compliance by "THE ASSOCIATING PARTY" with the payment of the economic participation.
b) Substantial breach of any obligations assumed by "THE ASSOCIATING PARTY", not remedied within _______ business days.
c) Force majeure that permanently prevents the continuation of the venture.
d) Legal impossibility to continue participating.
II. Causes for termination without liability to "THE ASSOCIATING PARTY":
a) Total or partial non-compliance by "THE ASSOCIATE" with the contributions committed.
b) Breach of confidentiality obligations.
c) Acts that materially affect the operation, reputation, or viability of the venture.
d) Force majeure.
e) Substantial breach of other obligations by "THE ASSOCIATE", not remedied within _______ business days.
In the event of termination, "THE PARTIES" shall take the necessary actions to liquidate any outstanding obligations.
TWELFTH. TERMINATION BY MUTUAL AGREEMENT. The Parties may terminate this contract at any time by mutual agreement via a written termination agreement.
THIRTEENTH. RETURN OR DISPOSITION OF CONTRIBUTIONS. Upon termination, "THE ASSOCIATING PARTY" shall return to "THE ASSOCIATE" the contributed assets that still exist in kind. In the case of consumable or fungible goods, the Parties shall determine the applicable treatment in good faith.
FOURTEENTH. FORCE MAJEURE AND ACT OF GOD. Neither Party shall be liable for non-compliance caused by force majeure or act of God. The affected Party must notify the other in writing within a reasonable period and adopt measures to mitigate effects.
FIFTEENTH. CONFIDENTIALITY. The Parties undertake to maintain strict confidentiality over all information disclosed in connection with this contract. The obligation survives termination. Non-compliance shall give rise to payment of damages.
SIXTEENTH. PERSONAL DATA PROTECTION. The Parties undertake to comply with the Mexican Federal Law on Protection of Personal Data.
SEVENTEENTH. AMENDMENTS AND WAIVER. Any modification must be in writing and duly signed. Failure to exercise a right shall not constitute a waiver.
EIGHTEENTH. ASSIGNMENT. Neither Party may assign rights or obligations without the prior written consent of the other.
NINETEENTH. NOTICES. All communications shall be made in writing to the addresses stated in the preamble. Any change must be notified at least 5 business days in advance (as per the contract).
TWENTIETH. ENTIRE AGREEMENT. This contract constitutes the complete and definitive expression of the Parties' intention.
TWENTY-FIRST. PROHIBITION ON ILLEGAL FUNDS. The Parties declare that the resources come from lawful activities.
TWENTY-SECOND. INTERPRETATION. References in the masculine, feminine, or neuter gender shall be deemed applicable to any gender. The Spanish version prevails.
TWENTY-THIRD. GOOD FAITH AND COOPERATION. The Parties undertake to perform this contract in good faith.
TWENTY-FOURTH. INDEPENDENCE. This contract does not create an employment relationship or agency. Neither Party has authority to bind the other except with express written authorization.
TWENTY-FIFTH. ABSENCE OF VICES OF CONSENT. The Parties declare they enter into this contract freely and consciously.
TWENTY-SIXTH. ELECTRONIC SIGNATURE. This contract may be formalized by autograph or advanced electronic signature.
TWENTY-SEVENTH. PARTIAL NULLITY. If any provision is declared null, the remaining provisions shall remain in full force.
TWENTY-EIGHTH. CUMULATIVE RIGHTS. The rights and actions established are cumulative.
TWENTY-NINTH. EXPENSES AND FEES. In case of judicial controversy, the non-performing Party shall be liable for reasonable attorneys' fees.
THIRTIETH. LANGUAGE AND PREVALENCE. The contract is executed in Spanish. Any translation is for reference only.
THIRTY-FIRST. SURVIVAL. Obligations regarding confidentiality, data protection, and payment shall survive termination.
THIRTY-SECOND. APPLICABLE LAW. JURISDICTION AND LEGAL ACTION. The Parties submit to the laws of the United Mexican States and the exclusive jurisdiction of the competent courts of _______.
__________________
FORMALIZATION CLAUSE.
Having read and understood this contract and being aware of its content and legal scope, "THE PARTIES" sign it in agreement on the date and place indicated at the beginning, in two original copies, binding themselves in all its terms.
________________________________________
_______
ASSOCIATE
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ASSOCIATING PARTY
