Know all the details about the MOU, by reading the insights provided on this blog.
Documents Required For MOU: A memorandum of understanding is an agreement between 2 parties who have agreed to enter into some contract. But sometimes, a memorandum of understanding, the terms, and conditions between the parties are yet to be negotiated or decided. The memorandum of understanding is generally made to outline obligations between the parties during initial discussions broadly. It mainly gives the intention of the parties before any deal is signed officially between them. In most cases, no specific rights are granted through the memorandum of understanding.
Why Do You Need to Have a Memorandum of Understanding?
A memorandum of understanding mainly describes the intention of the party. It will give an understanding to both parties to avoid any possible foreseeable point of dispute to work together. It is essential as it formalizes the first level of discussions between the parties and forms the basis for making a formal contract at this moment.
What Does a Memorandum of Understanding Generally Cover?
It includes all the essential terms and conditions. The following terms and conditions should be included in the memorandum of understanding, among others.
- The relevant details of the parties include personal information like full names, ages, and residential interests of the parties concerned with the memorandum of understanding.
- The goal and the purpose for which the memorandum of understanding is signed.
- Reporting plans and meetings, if any.
- Financial consideration
- Duration of the memorandum of understanding
- General clauses like termination of memorandum of understanding applicable laws indemnity clause in the arbitration clause.
- It should also include the date of signing the memorandum of understanding.
What Are the Documents Required for MOU?
Generally, no specific documents are required to execute or draft the memorandum of understanding. Still, you have to include the ID proof of all the parties concerned to confirm the names and permanent addresses of the party that should be scrutinized. Additionally, papers evidencing the party’s rights to carry out the business per the given memorandum of understanding and provide the service in question can also be scrutinized.
Procedure to understand the memorandum of understanding
There is no perfect procedure applicable for making the memorandum of understanding. But once any lawyer has drafted the memorandum of understanding, it must be precisely and carefully read by all the parties. All necessary changes must be made, and once a memorandum of understanding is finalized, both parties should sign a memorandum of understanding. All the parties should keep a signed copy of the memorandum of understanding.
The legal considerations regarding the memorandum of understanding
The memorandum of understanding mainly embodies the understanding regarding a specific project they wish to undertake. But if the document just exists as a memorandum of understanding, it cannot conclude whether such document is binding legally or not. From the content of this understanding, the intention of both the parties can be understood, and the legal nature of the understanding mainly depends on the rights, duties, and obligations which are created between the parties by way of a memorandum of understanding.
Additionally, there is no stamp duty payable on the memorandum of understanding, but as per the life memorandum of understanding incorporates any agreement for the buying of immovable property. If it is needed to be produced in court, stamp duty should be paid on it.
Validity of MOU
In India, a Memorandum of Understanding (MOU) does not establish a legally enforceable obligation, and this does not affect the MOU’s legal validity in India. It is usual practice to utilize it to form a non-binding contract that outlines the parties’ or enterprises’ intentions to collaborate on a project.
If a Memorandum of Understanding has been drafted for consideration, such as for the exchange of money or other goods and services, then the document will become binding on the parties; otherwise, it is a contract that is not binding.
The text of the MOU, as well as the provisions that are considered significant, might be used to infer the parties’ intentions. Several clauses in the agreement have legally enforceable effects, including the jurisdiction provision, the applicable law clause, and the indemnification clause. Therefore, the legal nature of a memorandum of understanding depends on the rights, duties, and obligations it creates between the parties.
Because the vocabulary of an agreement does not matter in the context of Indian law, the fact that a document is referred to as a memorandum of understanding does not necessarily indicate that it is not a legally enforceable agreement.
Click here to know about Memorandum of Understanding Format
The Necessary Legal Paperwork for the Memorandum of Understanding MOU
The drafting and execution of a memorandum of understanding do not necessitate the completion of any particular documents. However, to validate the parties’ names and addresses of permanent residents, we will require each party to present a valid form of identification for review. In addition, documents that prove the parties’ rights to carry out the business (as per the MoU) and deliver the service(s) at issue might be investigated.
Legal Aspects to Take Into Account When Drafting a Memorandum of Understanding MOU
A Memorandum of Understanding generally contains an understanding or a consensus between two parties regarding a particular project they intend to undertake. It is an agreement between those parties regarding how that project will be carried out. However, the mere existence of a document in the form of an MoU is not sufficient evidence to conclude that the document in question constitutes a (legally binding) contract. The contents of the MoU can be used to infer the parties’ intentions; hence, the legal status of an MoU is determined by the rights, duties, and obligations that are established between the parties as a result of this MoU.
In most cases, there is no need to pay stamp duty on an MoU. However, according to the law, stamp duty must be paid on the MOU if it contains an agreement for the purchase of immovable property and if it is required to be submitted in court. This is the case even if the agreement is not used to purchase real estate.
Above all, the memorandum of understanding plays a crucial role, and you need to understand the documents and the draft specifics before applying for the memorandum of understanding. You can connect with the lawyer to help you draft.
Conclusion
If you are looking forward to get a MoU made and want to know more details about it, then you can rely on Vakilsearch for the same
Also Read,
