Memorandum of Understanding
A memorandum of understanding (MOU), a written agreement between the parties and it is also known as letter of intent or memorandum of agreement. A Memorandum of understanding is a document which describesan agreement between the two or more parties. It is generally used in the agreement where the parties do not bound by any legal contract or any legal comitmmitment. It is a very formal way of the agreement. MoUs are very important document and are generally used for domestic purposes and agreements between nations.
A MoU have certain requirement which need to be fulfilled certain requirement are
- There must be a contracting partied to an agreement;
- One must identify what is the subject matter and objective of an agreement;
- Contain the essential of the agreement;
- It must be signed by the parties.
MoUs are generally not legally binding, because no parties want to deal with the ramifications of a binding agreement, and even they do not want to get involve the exchange of money.
Although Memorandum of understanding is a contract between two parties and it is more confidential but it does not have any legal existence. They carry a degree of mutual understanding between the parties as well as it may be considered as a gentel men agreement. Most commonly MoU is considered as the first step towards the formation of any legal contract. It even helps the parties to move towards the right direction for getting the work done.
MoU is an essential because it specifies the role and the responsibility of all the parties agreeing for carrying on the business and the organization is working in order to achieve the objective which was signs in the MoU it becomes the basic goal of all the members to work for that.
The reason that parties prefer for MOUs because MOUs are simpler to form and are flexible than contracts. We can say it is essential because every party prefer it as well as every party takes up a proper plan and invest energy, time to form this MOU.
Some of the related articles:
Author: This blog is written by Mr. Aman Verma, a passionate blogger & intern at Aapka Consultant.
OUR SERVICES
Company Registration I Trademark I Copyright I Patent I GST I MSME
ISO Certification I Website/App Policy I Legal Documentation
Annual Compliance I Connect Consultant
Visit: Aapka Consultant to get Online Services of CA CS & Lawyers.
