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Is Registration of MOU Compulsory in India?

Know all the intricate details about MoU as it is essential from the professionals and be legally very sure.

In the contemporary business world, business organisations are likely to enter various agreements while carrying out business. When negotiating with other potential business colleagues or vendors, joint ventures, or agents, these companies mainly enter into an agreement with them, which is the first friendly stage toward a grand alliance. But there are certain ambiguities surrounding whether the memorandum of understanding is legally bound. Read this blog to know what is memorandum of understanding in India, is MoU legally binding, can Registration of MoU in India, its key features and more.

Can a Memorandum of Understanding be Registered in India?

You need to know everything about registration of MoU in India before you eventually register. This agreement is just a promise between 2 or even more parties. Even though it does not have any legal binding, it is stated that it is a simple agreement and a legal value that can be used to establish any contract.

How Far is a Memorandum of Understanding Registered or Relevant?

A Memorandum of understanding is generally the first step of the agreement for the formal contract formation. Even the memorandum of understanding is not binding legally but can be considered one of the most severe documents by the law. To be enforceable, and if an agreement is to be non-binding, then it is the agreement that should contain binding and non-binding terms. It must have everything specified as a non-binding agreement. All the understandings and the terms are eventually accepted expectations between the parties.

The Legal Position of Dispute in the Memorandum of Understanding

The principal legislation governing the memorandum of understanding under Indian law is the Indian contract act 1872. It is one of the most stated characteristics of the contract featuring the intention of the parties to enter into the binding agreement or the obligation that leads to the formation of a contract.

Hence the clauses which are mentioned in the memorandum of understanding which make the provisions for the enforcement standard in case of a breach by either party are likely to confirm that the parties have no intention to enter into the binding agreement. The memorandum of understanding containing vague terms is nonbinding unless the critical understanding between the parties can be decided from any given context.

Even though there is a dispute resolution clause mentioned but if any breach happens, it can be settled out, and for this, the essential requirement is that the parties must settle the dispute in good faith if the dispute is not resolved within 14 days timeline then it will be resolved through the provision.

MoU For Business

Should you Register your Memorandum of Understanding?

Registration of MoU, you need to register it by mentioning some statements and documents.

  • To safeguard your interest, you need to put some enforceable clauses.
  • Besides that, if necessary other things, including the consequences, the timeline etc., should also be mentioned here.
  • Furthermore, it would be best if you put some termination clauses in the memorandum of understanding and register.
  • If there is some monetary exchange, then it must be registered to safeguard the interest of the parties.

Conclusion:

To know anything about Registration of MoU, one can surely rely on Vakilsearch, as here the team of professionals is very experienced. 

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About the Author

Abdul Zaheer, a Corporate Legal Advisor, brings over a decade of expertise in corporate governance, mergers, acquisitions, and contract law. He specialises in compliance, risk management, and dispute resolution, helping businesses align legal frameworks with objectives. Abdul’s practical insights ensure regulatory adherence, reduced risks, and seamless corporate transactions.

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