How long is a Memorandum of Understanding valid? This agreement can be highly helpful when you want to tie up with other companies on an official bonWhat at about the time limit? Let’s know everything in this guide.
How Long is a Memorandum of Understanding Valid? : A Memorandum of Understanding is often referred to as a ‘gentleman’s arrangement.’ The MOU is a contract that governs two entities, companies, and organizations, working to an agreed-upon course of action and creating an official relationship between them. A memorandum of understanding is less complex when compared to traditional contracts. They aren’t generally legally binding; therefore, the parties signing the memorandum of understanding don’t have to worry about any legal implications. While the document may not be legally binding, it still carries an element of respect and seriousness. It demonstrates the intent of the parties to sign an official legal contract. Besides the definition of an MOU, this article outlines this document’s ins and outs. It discusses the how long is Memorandum of Understanding Valid and outcome of ending it.
What Exactly is a Memorandum of Understanding ?
It is useful to describe an agreement that is not binding and outlines the intentions of two individuals or companies to work in the spirit of consensus. In India, these documents are often referred to as a ‘Letter of Intent.’ It’s vital to understand that agreeing to a memorandum of understanding doesn’t mean that the contract is not binding. If we talk about the legal context in India, the nomenclature of the agreement can be irrelevant.
Validity of a Memorandum of Understanding
In general, you consider an MOUs as a ‘Letter of intent with two or more people that intend to sign the contract in the future. By briefly understanding the fundamentals of a legally Memorandum of Understanding Valid contract, we know that one of the primary requirements is the intent of both parties to form an official relationship.
In an agreement MoU, there’s no intention for either party to create an official relationship. In simple words, enforcement of the agreement isn’t a must. These agreements aren’t contracts which is why they are not binding or legal. But, the buck doesn’t end at the end of the road, and more goes into it. It’s the intention, not just the words, that establishes the meaning of the document, therefore, its legality. The law that governs the fundamental contract – All contracts are legal agreements. However, any agreement that is not a contract defines the essential rules of legally valid contracts. It should meet all of the necessary elements mentioned in Section 10 of the Indian Contract Act, 1872. Thus, if both parties agree on writing an memorandum of understanding in a way that meets the requirements of section 10, the court considers it legally binding, regardless of whether the parties named the document as an memorandum of understanding.
When an arrangement is necessary to satisfy the basic requirements of an agreement, it must be interpreted per the rules laid out in The Indian Contract Act, 1872, and The Specific Relief Act, 1963.In addition, the principal law that governs MOUs and agreements in India includes The Indian Contract Act, 1872. For instance, if a contract contains a clause regarding dispute resolution procedure, it is binding on the parties to fulfil their obligations as stipulated in the agreement. In non-performance, it could cause a dispute or breach of the agreement. The memorandum of understanding itself might contain an agreement that outlines the method by which the parties want to resolve in an ideal faith and in a friendly way. After all, no one wants to face the hassle of paying visits to the court and paying huge sums of lawyers to sort things out.
What Can I Do to End an Memorandum of Understanding?
You already read about the validity of an memorandum of understanding, but what’s the procedure when you want to end it from your end? Well, the steps required to terminate an memorandum of understanding are fairly easy and, even more importantly, not expensive. Parties must reach an agreement on the end date and inform the opposing party in writing.
When both parties decide on the termination, each party must communicate the end of the agreement to the other in writing. You can do this with the help of an email, a formal letter or even a telephone call.
It is crucial to ensure that the notice is concise. Also, you can make it clear to ensure that there is no confusion regarding the conclusion of the agreement.
The MOU will be declared to be in effect when the other party is notified. The parties are free to seek different agreements or relationships.
It is crucial to remember that, based on the specifics of the memorandum of understanding, certain conditions or requirements might have to be met before the memorandum of understanding can be terminated. For instance, some of these might require a specific notice period before termination can be made. Make sure you read the conditions before deciding to end it.
Are the MoUs Legal in Court?
There isn’t a definitive answer to this issue since the legitimacy of this contract could differ on a wide range of elements. For example, the document’s details, the intent of the parties, the area, and the country you enforce it. It must specify the agreement in general.
Generally, a contract will be more likely to get accepted in court if it’s clear, concise, and contains all pertinent details regarding each party’s rights and obligations. Furthermore, the parties must agree to the memorandum of understanding to make it legally binding. If one of the parties refuses to sign, the court cannot enforce the agreement.
What is the Next Step After an MoU Ends?
If a party terminates the memoranda of understanding, the terms and conditions of the agreement no longer remain in force. Parties are free to revise the conditions of the agreement or to end the agreement altogether. In case of an MOU contract renewal, the new contract will include new terms and conditions that reflect any change in the parties’ situation.
Conclusion
A Memorandum of Understanding holds a specific power. This is because it’s an alternative to the legally-binding contract intended to create a legally binding connection between the parties. When drafting an MOU, not only the explicit intentions of the parties must be considered, but also the language, title, and specific clauses in the document must be carefully considered. If not, it could result in a massive loss to the parties. We hope this blog- How Long is a Memorandum of Understanding Valid is helpful!
Also Read:
- Writing Guide for a Memorandum of Understanding
- What is a Process of creating a Memorandum Agreement
- How Can a Memorandum of Understanding Help Your Business?
