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Agreeing is necessary to avoid any future disputes among the company members. There are different types of agreements made based on the company’s needs and the choice of its employees. MOU’s full form is a Memorandum of Understanding. It is an agreement between two parties showing a joint will or line of action. Moreover, these are not legally bound document yet holds great importance for the law.
What is MOU?
MOU or memorandum of understanding is the non-legal agreement between two parties showing familiar outlines agreed by both parties. It gives the chance and motive of the talks. Therefore, it is considered the initial step of negotiation. Moreover, it consists of the duties and expectations of the parties involved in the agreement. It has a great significance in high-stake business dealings and international treaties.
MOU indicates a mutual understanding between the parties and is an imminent contract.
The information included in an MOU is as follows:
- The correct names and other contact details of all the partners involved in the agreement.
- Both parties decide the common goal of the deal.
- The exact or approximate date when this MOU will become functional.
- Lastly, it must have the consent of all the partners in the form of their signatures.
- Working of MOU
A memorandum of understanding is a plan that explains the responsibilities and requirements of both parties. MOU created at the initial stages of the partner’s relationship does not involve any money exchange. All the partners of MOU must resolve any of their conflicts and state their expectations before proceeding toward the contract negotiation stage. Thus, to produce a memorandum of understanding, all partners and the parties must reach a mutual decision and goal. Their top priority must be what is most important for both parties.
This MOU’s full form as a Memorandum of understanding is used synonymously with the letter of intent in the US. The letter of intent and the memorandum of understanding are non-legally bound contracts with significant values. The MOU holds an important position in international treaties because it takes much less time to approve than treaty negotiations. It is possible to keep these MOU confidential. Moreover, these memorandums of understanding can also alter the present legal treaties.
Advantages of Memorandum of Understanding or MOU
After understanding what is MOU, it is clear that the main advantage of it is that it allows both the parties involved in the agreement to express their goals and expectations clearly. In this way, the chances of any future dispute become negligible. Both the parties know their responsibilities and what to expect from the other party.
The disadvantage of a Memorandum of Understanding or MOU
As stated in the MOU definition, this agreement is not legally bound, which is its topmost drawback. Although it holds a significant impact in the eyes of the law, due to not being legally bound, the parties can change their expectations and walk away from it. Creating an MOU requires excellent planning. Therefore, any change of expectation will only waste time and resources.
Examples of Memorandum of Understanding (MOU)
Some examples of MOU are as follows:The MOU or memorandum of understanding between Singapore, China and New Zealand on the labour cooperation in 2008 is an example.
The memorandum of understanding under the Under2 Coalition set a goal for climate change mitigation.
Saginaw Chippewa Tribal Nation and the Michigan Department of Natural Resources made an MOU for co-managing the Sanilac Petroglyphs Historic State Park on December 2, 2019.
Is an MOU (Memorandum of Understanding) a legal or non-legal document?
MOU is a non-legal document, yet it holds great importance in the law.
What is the importance of an MOU?
MOU’s full form as a memorandum of understanding is essential as it states the common objective and goal of both the parties involved in the agreement. This standard agreement eradicates the chances of any future disputes among the parties. Producing an MOU takes less time; therefore, it holds a significant position in forming international treaties. Moreover, it can be kept a secret (a confidential agreement).
Is the MOA (memorandum of agreement) an MOU (memorandum of understanding) the same?
No, MOA (memorandum of agreement) and an MOU (memorandum of understanding) are different. MOU is an agreement that describes a common objective or goal of all the members of the parties involved. On the other hand, MOA describes the detailed responsibilities of each party to be taken for achieving the purpose of the agreement.
Who writes an MOU or Memorandum of Understanding?
Either party can write an MOU of the parties. In most cases, the party that wants a written document for the agreement writes an MOU. However, it is necessary to have the consent of both parties to form an MOU.
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