CS Executive · Setting Up of Business, Industrial and Labour Laws · Business Collaborations
In a 50:50 joint venture company, the two partners cannot agree on a key budget and board meetings repeatedly end without a decision, so the business is stalled. Which joint venture agreement provision is specifically designed to resolve this situation?
A deadlock resolution clause is meant for this. It sets steps like escalation to senior management, mediation or a buy-sell option when equal partners cannot decide. Anti-dilution, non-compete and drag-along clauses address different issues and do not break a decision stalemate.
- AA deadlock resolution clauseCorrect
- BAn anti-dilution clause
- CA non-compete clause
- DA drag-along clause
Explanation
A deadlock clause provides steps such as escalation, mediation or buy-sell mechanisms when equal partners cannot agree. Anti-dilution protects against reduction of holding, non-compete restricts rival business, and drag-along forces minority sale to a buyer; none addresses a stalemate directly.
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