A memorandum of understanding (MOU) is a nonbinding agreement between two or more parties outlining the terms and details of an understanding, including each parties' requirements and responsibilities.

By on 13-11-2018

WHAT IS A 'MEMORANDUM OF UNDERSTANDING - MOU'

A memorandum of understanding (MOU) is a nonbinding agreement between two or more parties outlining the terms and details of an understanding, including each parties' requirements and responsibilities. An MOU is often the first stage in the formation of a formal contract.

 HOW MOU IS DIFFERENT FROM AGREEMENT:

MOU is like a contract, but it does not have to carry the same legal weight. If the wordings used in the MOU are vague and unclear and do not create any binding effect, then the same cannot be enforced. It does not create a valid contract. But if one party do anything on reliance of MOU and sustains any loss he can recover back losses but cannot get enforce the MOU. Both Parties of MOU are bind by estoppel and any of them cannot take adverse stand.

A memorandum of understanding is an agreement between two parties in the form of a legal document. It is not fully binding in the way that a contract is, but it is stronger and more formal than a traditional gentleman's agreement. Sometimes, a memorandum of understanding is used as a synonym for a letter of intent, particularly in private law. A letter of intent expresses an interest in performing a service or taking part in an activity, but does not legally obligate either party.
While, Agreement contains proposal and its acceptance and intention of parties is to bind each other with the terms of agreement. It is intention of parties that if any one violet the terms other will go to court and get it enforced.

 “HOW TO WRITE A MEMORANDUM OF UNDERSTANDING?”:

Since each deal is vastly different, there is no particular convention of writing MoU. As said above the MOU can be a simple statement. In reality, you can make the Memorandum of Understanding as simple or complicated as is necessary for the situation and the comfort of those involved. Some want every detail and possibility ironed out ahead of time; others don't.