In case where the conditions under the Indian Contract Act, 1872, are not fulfilled, the MOU is not recognised as a legally valid contract. MOU is governed by the Indian Contract Act, 1872, and if conditions under the Indian Contract Act are fulfilled, then the performance of an MOU can be enforced under the Specific Relief Act, 1963 where a Specific relief is granted when compensation cannot be ascertained in monetary terms. Enforceability Of Memorandum Of Understanding as per Law: In the Indian legal scenario, nomenclature of an agreement is irrelevant thus simply calling an agreement a Memorandum of Understanding does not automatically denote that a contract is non-binding. Thus the legal nature of an MOU rests on the rights, duties, obligations, it creates among parties. Clauses such as jurisdiction clause, applicable law, indemnification have binding effects to the agreement. The intent of the parties can be deciphered from the contents and the material provision of the MOU. If an MoU has been drawn for consideration, like for exchange of money, etc., the document would become binding on the parties, else it is a non-binding contract. It is commonly used for a non-binding contract, that describes the intention of the parties or businesses to work together. Legality of Memorandum of Understanding: Legal validity of MOU in India:Ī Memorandum of Understanding (MOU) does not constitute a legally enforceable obligation. Conditions driving towards Termination of MOU,ĭepending upon the nature of transaction covered under MOU, the clauses can be addeded or removed and agreed upon with mutual consent. Financial Consideration, if any, involved in the transaction,Ħ. Technical and Financial Support, inf any,ĥ. Objective or Purpose of entering into MOU,Ĥ. Thus, according to the intentions of the parties, Memorandum of Understanding draft shall be scrutinized and finalised. that, such MOU serves as a basis for making a formal contract later-on.the common understandings between the parties, and.Our well-versed lawyers will work on drafting the Memorandum of Understanding for you having all the required details will be ready for you to download. Login to our website and visit to the Form of MOU.įill in the details of the parties, details of transaction to be carried under Memorandum of Understanding, duration, arbitration and few other questions to get MOU (Memorandum of Understanding) online. Also, it should provide for the circumstances in which such memorandum will be terminated. The memorandum should specify the duration of such an agreement between the parties i.e the beginning and the ending dates of the memorandum. Once the MOU is prepared and agreed upon by parties involved, it should be signed and dated by the authorized individuals representing each party or organization.ĩ. The role, responsibilities, and remuneration should also be mentioned.Ĩ.
Management: The memorandum may provide for the appointment of the persons to take care of the day to day operations of the program. The financial record keeping of the assignment/program being undertaken should also be maintained.ħ. It should also mention the person authorized to make the major financial decisions.Ħ. The memorandum should specify the amount of capital contribution to be made by the parties.ĥ. the parties can decide to meet at least once in a quarter.Ĥ.
It should specify the plan for the meetings between the parties. It should clearly specify the purpose and the goals for which the memorandum is being signed.ģ. It should specify the name & other details of the parties between whom memorandum of understanding is being signed.Ģ. Features of MOU:Ī Memorandum of Understanding should have the following features:ġ. It does not constitute a legally enforceable obligation but, this non-legally binding MOU may be useful to serve as an agreement between two or more departments within a single public entity. MOU’s can be kept confidential by the parties, if desired. It is used to gauge the intention of the transacting parties before a deal is officially signed between them and doesn't grant either of them any rights. It is made when two or more parties outlining the rights and obligations of the parties to the agreement are into initial discussions. A Memorandum of Understanding or MOU Agreement is entered into when parties have agreed to enter into a contract, but the formalities (such as terms and conditions) of the contract are yet to be negotiated. Memorandum of understanding (MoU), also known as Letter of Intent in India, is just a means for two parties to reach a decision.
What is MOU? What is Memorandum of Understanding?
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