Overview
A Memorandum of Understanding or more popularly known as an MOU is an agreement, which is made between two or more parties, when they wish to lay out the rights and obligations of the parties, and thereby, agree on a course of action to reach a valid and a common conclusion. It is indeed a formal agreement; however, it is not legally binding on the parties. In order to be legally operative, the MOU between the parties should clearly enumerate the name of the parties, the object, and the purpose of the contract, and also summarise all the important terms and conditions. Usually, MOUs are less time consuming, and since it is not legally binding, the parties avoid the legal implications altogether, as opposed to a contract. This is majorly attributable to the fact that a legal agreement between parties contains the undertaking of the risks, warranties, and indemnifications due to the nature of the contract involving the exchange of money or any other considerations. On the other hand, an MOU is a non-binding agreement that highlights the effective negotiations between the parties, that were involved in achieving a shared goal.
What Is The Process?
Discussion : In order to draft or generate an MOU, the concerned parties should, at the outset, reach a mutual understanding. In this process, each side learns about the things that are mutually required for each party in order to move forward with a synergetic relationship.
Drafting : This process often begins when each party drafts its own best-case MOU through a professional.
Finalization : The MOU and the process of drafting it to consider all ideal or preferred outcomes. Moreover, it also considers the things that are offered to the other party(s), and what points may be non-negotiable.
Details Required
- Names of parties.
- Specific points of understanding between the parties
- Description of the project
- Roles and responsibilities of each party
Timeline
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