Most MOUs are not intended to be legally binding, meaning that the parties may not actually be legally obliged to comply with it. In order to facilitate these sorts of discussions, it can be very helpful for the parties to have the general terms of the agreement written down in an MOU.
Whats an mou professional#
But before finalising the terms and making it legally binding, they want to go away and discuss the matter with their business partners, professional advisers, or lenders. Although the parties may intend to eventually enter one of these agreements together, in many cases, for a variety of reasons, the parties may not be ready to actually formalise the arrangement.įor example, the parties might have reached an agreement in principle, and they want to document this. It is intended as a starting point for the parties, as it enables them to set out the preliminary agreement which has been reached and can help them to work towards a more formal agreement.įor example an MOU could be used as a first step before parties commit to working together under a Partnership Agreement, Service Agreement, Business Sale Agreement, Contract for Sale of Goods, or a Joint Venture Agreement. What is an MOU?Īn MOU is a basic document which can be used between two or more parties that are interested in working together on a particular project. We will cover this in more detail later in this guide, but if you have any concerns about your own situation, seek legal advice. In some cases, MOUs have been found to be legally binding. However, as with any legal matter, this can vary depending on the circumstances. It is intended to be quick and easy to prepare, so that the parties can set out their basic agreement, and can confirm they are on the same page. It is an informal document, outlining the basic terms of a deal, but not going as far as a formal contract does. A Memorandum of Understanding (also known as an " MOU" or a "Heads of Agreement") is a very useful document in many business transactions.
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