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The consortium and the temporary joint venture as contractual instruments for business collaboration

In recent years, the country’s companies have had as a common characteristic the fact of forming alliances and groupings

with the purpose of temporarily joining their structures and business capacity with the objective of contracting with a third party to perform a work, render a service or supply a service.

Consortiums and temporary joint ventures have been the mechanism used to achieve this purpose, since the companies maintain their individuality, structure and legal status, but are grouped together for a certain period of time and for a certain purpose.

These contracts of temporary joint ventures do not constitute companies; once the specific purpose for which they were temporarily united has been fulfilled, they are separated.

Law 80 of 1993 mentions both figures (it does not regulate them), understanding the consortium as when two or more persons jointly submit the same proposal for the award, execution and performance of a contract. These persons are jointly and severally liable for their obligations; and joint venture when two or more persons jointly submit the same proposal for the award, execution and performance of a contract, being jointly and severally liable for the object of the proposal and the contracted amount. However, with respect to the penalties derived from the non-compliance of the obligations derived from the proposal and the contract, each one responds in proportion to its participation within the joint venture.

With respect to solidarity, it is necessary to differentiate whether the third party with which it is intended to contract is a public or private entity since, if it is a public entity, the liability of the consortium or temporary joint venture will be that indicated in Article 7 of Law 80 of 1993, this solidarity established in Law 80 does not admit any agreement to the contrary.

On the other hand, in the event that the third party is a private individual, the liability will continue to be joint and several, but not based on Article 7 of Law 80, but based on Article 825 of the Commercial Code. The difference is that in this case it is possible to agree to the contrary and in this sense there could be a non-solidarity pact.

The contract with the third party shall be executed by each of the parties of the joint venture or consortium. In any case, to make the business more operative, the group members appoint a voluntary representative, who is given the necessary powers to carry out actions such as modifying or negotiating the contract.

Finally, we emphasize that consortiums and temporary joint ventures do not have to register with the chamber of commerce, but they must file the RUT in order to obtain their NIT, since they will have to assume certain tax obligations.

Written by: Gianna Negrete Castillo

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