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What Is Memorandum Of Understanding?

  • Definition
  • Letter of intent
  • Importance
  • Fundamental points
  • Important ingredients
  • Procedure
  • Exclusive and non-exclusive MOU

What Is Memorandum Of Understanding (Mou)?

A memorandum of understanding (MOU) is a type of agreement that is executed between two or more parties. MOU although is of non-binding nature but it defines important key points of the understanding including terms and conditions of an agreement between the parties which are involved in the negotiation of the contract.

Why There Is A Need Of Mou?

MOUs although of legally non-binding nature but it is the first and foremost step towards making of legally binding contract, so MOU has great significance as it defines all the key points agreed between the parties in written form thereby by elucidate main motives of the agreement that might save parties from any dispute in future.

In US, MOU is sometimes interchangeable with a Letter of Intent (LOI), which is also a non-binding written agreement that implies a binding contract is to follow.

When Should You Go For A Mou?

MOUs are usually used in commercial/merchandising association or partnerships to form mutual goals and expectations. It enumerates the rights and obligations between both the parties, which they can further incorporate into a formal contract in future.

Parties may go for MOU when:

  • Parties do not want to form legal relations;
  • Parties seeks mutually beneficial partnership/association; or
  • Parties want to outline the mutual goals of a commercial partnership/association.

What Are Fundamental Points For Developing An Mou?

  • There should be a mutual desire between both the parties to enter into an MOU/understanding, with a shared and equal commitment to work together;
  • The specified provisions in the MOU should not conflict with any existing arrangements/understanding between the parties, or with any other party;
  • The structural flow and contents of the MOU should be clear, unambiguous and easy to review and understand. The simpler and plain the language, the less likelihood the chances of any misunderstanding or confusion or dispute;
  • An MOU is a ‘living’ document and so there needs to be provision so that regular reviewing and updation can be done;
  • As MOU is a formal agreement/understanding, it should be drafted with the assistance of experts/professional in the field. It should be clearly written to avoid any implication or encumbrances or unreasonable expectations; and;
  • In certain cases where there is any complexity in the agreement such as agreement between more than 2 parties, provisions need to be written carefully since it will be a three-way negotiation. Nevertheless, the general principles mentioned shall apply..

What Are Important Ingridients That Needs To Be Included In Mou?

  • Identification of parties(company, agency, partners etc) entering into the agreement such as Name, Address, etc.;
  • Define Background of the project/agreement; Important undertakings and Assignments;
  • Definition of Terms;
  • Important components/Introduction: Project overview; Major goals and targets; Accreditation; Consequences; Any linking projects; Summarize activities, authorization, goals, Intended aftermath, etc.;
  • Legislative Context;
  • Aim of the MOU;
  • Scope of MOU;
  • Prime liabilities of First Party and Second Party: Actions, Joint undertaking, or documentation etc.;
  • Non-Disclosure of confidential information: Details of the same and liabilities and penalty if any
  • Term of the operation contract/Renewal;
  • Focal Points;
  • Force Majeure;
  • Modification/termination;
  • Additional Annexes as required.

What are the services Lawyerinc offers for Memorandum of Understanding?

Our services:

Our comprehensive range of end-to-end solutions includes following:

  • End to end services for Memorandum of Understanding.
  • We have expertise in drafting Memorandum of Understanding.
  • We will get in touch with you through expertise in this field.
  • Our Experts shall guide you through the procedure and supply you with a detailed checklist of the required documents.
  • We shall verify the documents you provide
  • Free consultation for any enquiry that you may have about Memorandum of Understanding.
  • You will get your Memorandum of Understanding drafting done without any hassles.

*Any fee, stamp duty and miscellaneous charges shall be payable extra.

Do contact us in case of any query related to Memorandum of Understanding and much more.

To avail any of the above-stated services, kindly establish contact by posting a query at our site.

Who Should Write Memorandum Of Understanding?

A written agreement/ Memorandum of Understanding (MOU) play an important role in defining and clarifying the key points agreed between the parties. A well-written agreement, free from encumbrances, can save the parties from any dispute between the parties in future. It is recommended that instead of using complex words and language, the MOU needs to be written in plain words that can be understood by both the parties as the main motive of the agreement is to maintain the same legitimacy between the parties that any verbal agreement would have. So it is recommended that MOU needs to be written by some professional/expert in the field or an Attorney.

What Is The Procedure For Drafting An Mou?

There is no defined or specified procedure to be followed for drafting MOU. When one party is planning to a start a new business or undertaking with other party, they starts deciding key components and motives as what is wanted or desired, what can be offered, what is willing to be negotiated and what is off the table. After mutual discussion between the parties, A first-cut agreement/undertaking is drafted, further both the parties meet to discuss the details of the undertaking.

Further both the parties discuss terms and conditions of the agreement and timeline of execution of MOU. Other important provisions are also discussed between the parties. Once finalized a professional/Attorney is appointed to daft the MOU. Once completed, both the parties come together to sign and verify the same.

What Is Exclusive Or Non-Exclusive Memorandum Of Understanding?

A memorandum of understanding can be elite or non-elite both. In Exclusive MOU both the parties are kept restrained from trading with any other party for same kind of goods and services or to execute similar kind memorandum of understanding with other parties till the completion of mentioned term of in the MOU. Whereas in Non-exclusive MOU, the parties are allowed to trade or enter into similar Memorandum of Understanding with other parties simultaneously. Generally parties go for Exclusive MOU if one party is worried that those competitors might approach other party and may begin transactions with them, so to secure their business or avoid any competition parties can go for Exclusive MOU.

Frequently Asked Questions

  • 1. Who can sign the MOU??

    MOU can be signed by both the parties and their legal representatives. If one of the parties is company, then company can appoint its Authorized Representative to execute the same or to take decision on behalf of company.

  • 2. Is there any limit on number of parties to an MOU?

    Although there is no limit on number of parties to an MOU but generally there are two or three parties to an agreement.

  • 3. How long an agreement does lasts if duration is not mentioned?

    Generally agreement lasts as per the term agreed between the parties or on occurrence any particular event. If term or duration is not mentioned, sometimes duration consider as 1 year or as per decision of the parties.

  • 4. Can I draft MOU by self or shall I take lawyer’s help?

    There is no doubt you can draft MOU by yourself but it is always recommended to take professional help to avoid any encumbrances in future.

  • 5. Are the parties of an MOU are agents to each other or they can be referred to as partners?

    No, there is no agency or partnership implied between the parties to an MOU. Each party is deemed to be independent to each other and is responsible for his own actions and deeds.

  • 6. Why to get MOU drafted through lawyerinc?

    Lawyerinc is a complete blend of professionals from across the globe. In –house team of lawyers and attorneys, CA and CS. All professional work together in Lawyerinc, providing you end to end solution. It guarantees delivery in the shortest and most reasonable rate in India. It enjoys a global presence.

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