A contractual agreement in which two parties, a client and service provider, agree to terms and conditions that are to govern all transactions between them for the long-term.
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A Memorandum of Understanding (MoU) is a document in which two or more parties declare that they agree on a common course of action or business. It is the first stage of the making of a contract. An MoU is generally recognised as binding even though it creates no rights and obligations in itself. To be legally operative, an MoU must identify the contracting parties, spell out the subject matter of the agreement and its objectives, summarise the essential terms and must be signed by the contracting parties.
The Master Service Agreement covers the entire relationship between service provider and customer, covering all aspects of the contract that are likely to arise. Such an agreement is beneficial to have in place before starting a long-term relationship with a vendor/customer.
It provides a framework to quickly negotiate agreements. Therefore, the same terms need not be repetitively negotiated for deals that are very similar to each other.
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