MEMORANDUM OF UNDERSTANDING (MOU) – DEFINITION AND WORKING
Category : Blog , Front Page
A Memorandum of Understanding or (MoU) is an official document that represents an agreement between two or more parties on a common issue
A Memorandum of Understanding (MoU) does not bind the parties involved in the agreement and does not even act as legal evidence in case of the failure of keeping promises mentioned in the Memorandum of Understanding.
A Memorandum of Understanding (MoU) simply represents that two or more parties are willing to work on something together, and it can be referred to as the first step towards getting into a legal contract. A Memorandum of Understanding (MoU) can be drawn on a napkin or can be a detailed written document after the full day meeting between two or more parties. Memorandum of Understanding (MoU) is used often used in international pact negotiations and also used in the business world for merger and acquisition talks.
Most of the time, A Memorandum of Understanding (MoU) is confused with other similar agreements such as Memorandum of Agreement or Letter of Intent. But in legal terms, all of these serve the same purpose, and there is not much difference between them on the legal level. Moreover, In the United States of America, Memorandum of Understanding is a synonym to the Letter of Intent.
Like I mentioned before, Memorandum of Understanding (MoU) can be a concise and small written document, or it can be a long and detailed document, but irrespective of its length and detail it states the mutual expectations of the parties involved along with their acceptance of the expectations mentioned in the Memorandum of Understanding.
A memorandum of Understanding (MoU) is less official than a contract, which means parties can’t sue legally each other if a breach takes place, and it is more formal than a handshake agreement or a gentleman’s agreement.
How a Memorandum of Understanding (MoU) works?
When two or more parties sign a Memorandum of Understanding, it shows the hint of agreement between the parties involved, and they are willing to move forward and work together. A memorandum of Understanding (MoU) is prepared before signing a final contract. It consists of all the details of the contract before a final legal contract. Therefore, It is not wrong to say that a Memorandum of Understanding is an agreement before a final agreement. A memorandum of Understanding (MoU) is a straightforward and simple document which states the conditions, needs, and wants of both parties. It is wise to prepare a Memorandum of Understanding rather than just writing pointers plainly on a paper. This makes the conversation between the two parties more formal, and they know they whatever they are saying is being documented, and this makes them pay more attention to the meeting.
Sometimes, a memorandum of Understanding (MoU) is prepared by making notes of a conversation between two parties. This method of writing a Memorandum of Understanding is adopted when two government bodies or senior management of large business organizations interact with each other.
A memorandum of Understanding holds power because of the time and energy invested in the preparation of it and helps in makes the further process smooth and free of any confusion, such as, after the preparation of the first draft, parties can meet and discuss on the points mentioned in the memorandum of Understanding (MoU) to make a final contract and minimize the confusion
Even though a Memorandum of Understanding is not a legal document but along with negotiable points mentioned by both parties, it also contains information like contact information of both parties, dates for performance review, processes involved for dispute resolution, begins date, and expiry date of the Memorandum of Understanding. Moreover, if you want, you can also include privacy statements, disclaimers, and restrictions on the Memorandum of Understanding (MoU). In the last, it is duly signed by the parties involved.
In simple words, we can say that a Memorandum of Understanding helps in keeping track of everything mentioned in a meeting without missing anything, and it makes the further process of creating a final contract smoothly.
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