The parties, as well as there organisation, should be easily identifiable. Each partner to an MOU should be described. Important essentials of MOU include: Parties to the AgreementĪn MOU should mention the parties to the agreement. Hence many provisions in a standard contract can be found within an MOU such as the non-disclosure clause, indemnification clause, dispute resolution mechanism and so on. Memorandum of Understanding is always different from a normal contract but shares a lot of similarities. So it makes sense for parties to enter into an MOU which is always a softer document while compared to a contract. An MOU is always considered when the parties desire to avoid legal implications before creating a valid agreement. Once they reach an agreement an MOU is created. It describes the accepted expectations of the parties provided they can come together to explain what they offer in return and negotiate over the same. Parties need not avail the help of a lawyer for entering into an MOU especially when there is no money involved in the mutual arrangement. The need for standard terms of a contract and hardcore negotiations are also minimised. It does not take much time and effort in creating an MOU when compared to a legal contract. But MOUs are much more appealing to parties due to its simple and less complex nature.

It may be surprising to see two parties entering into an MOU in lieu of a legally enforceable contract. MOUs are usually used in international treaties as well as high stake business affairs such as merger talks. That means an MOU is usually followed by a standard legal contract. Rather, it signals the intention of the parties to enter into a formal legal agreement. MOUs in general sense isn’t legally enforceable and the parties to the MOU avoid all sorts of legal ramifications. When two or more parties agree to work towards a common objective, without a legally binding contract, an MOU is created. A MOU is simpler and often a less complex document when compared to normal contracts. They are a set of guidelines that governs two parties, while working towards a common line of action. Things to keep in mind while drafting an MOUĪ memorandum of understanding is sometimes called a “gentleman’s agreement”.Differences between MOU and Letter of Intent.Conditions for Alteration and Termination.

Sample mou