Typically, the MOU consists of the parties to the contract and the work process for which the parties are outlining the agreement.Although the MOU is not legally binding, it is a solemn declaration of the commitment between the parties.It expresses that the parties have reached final understanding of the agreement and are ready to move forward to implement it. It indicates that the parties have come to a conclusion after the negotiations. MOU is an expression of a contract for the parties involved in it to proceed.Image Source : © Kalkine Group What are the Salient Features of Memorandum of Understanding? How Does a Memorandum of Understanding Work? If anyone party breaks the terms and conditions of the agreement, the other party can go to the court and get it enforced.Īt the same time, Memorandum of Understanding MOU is where both the parties propose their common intent and commit to it in the future. It contains a proposal and its acceptance by the parties involved. The agreement is a document parties accept to work together on a project or standard work process. What is the Difference between MOU and Other Agreements? Many private and public companies, as well as government agencies, use MOU to initiate a process. It states the scope and purpose of the negotiations talks, and it defines an intended standard line of action. Memorandum of Understanding starts as an initiation for negotiations. The basic terms of the document are agreed, and the parties should sign it in order to make it mutually binding. Usually, in a memorandum of understanding, the details of the contracting parties and the subject matter of the agreement along with parties’ deliverables are noted. The signing of the contract showcases the willingness of the parties to move ahead and start the work/project. However, if any legal elements are mentioned in the memorandum of understanding, then the parties have to abide by it as well. MOU has been commonly opted when the parties do not want the deal to face any compulsion by law. It is more of a formal agreement between two or more parties and proof of their commitment to each other.
MOU is not a legal contract, but is can be recognized as binding on the rights and obligations mentioned in it. What is a Memorandum of Understanding (MOU)?Ī memorandum of understanding (MOU) is a document that expresses mutual accord between two or more parties.
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