MOU Full Form

A Memorandum of Understanding (abbreviated as MOU) is actually an agreement that occurs between two or more parties. An MOU outlines the rights and obligations of the parties who are engaged in the agreement. An MOU full form in business is made when the parties enter into initial discussions. 

The question is what is the agreement? Or who are the parties that will enter into the agreement?

An agreement can be any, as the agreement to maintain cordial and friendly relations between two neighboring countries, an agreement can be between a player and his club, an agreement can be in business between two partners. 

The basis of the agreement will be basically the terms and conditions that both the parties are liable to follow when entered into an agreement.

In this section, we will further know about MOU long form, MOU full form in business, we will also know all other concepts related to MOU. 

MOU Full form

The MOU long form is a Memorandum of Understanding. Also, MOU’s full form in business is a Memorandum of Understanding in business matters. In business, parties enter into MOU while investing in the shares of that business, or while partnering or conglomerating in the business field. We will discuss MOU’s full form in business in the upcoming section vividly.

MOU Agreement full form is Memorandum of Understanding agreement which can be entered between literally any legal parties. MOU sign full form is Memorandum of Undertaking signed between the parties. 

MOU - An Agreement Between Two or more 

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As already discussed, MOU stands for ‘Memorandum of Understanding’. This is a written and a non-disclosure agreement which signifies an agreement among two or more than two parties have been made. The MOU is a voluntary, yet not a valid or legal commitment. However, MOU binds the bilateral and also the multilateral in terms of rules and regulations which are proclaimed under it. MOU acts as evidence that exists among bilateral and multilateral parties of signing an agreement among each other.

A memorandum of understanding is normally preferred by the parties, at the time when they don't want to be enforced by any obligations of the law. Although any other legal commitments are quoted in this memorandum of understanding, this makes the parties obligated to follow it.

Inclusion in an MOU

The MOU which is being entered between the parties demonstrates their individual readiness to work or to start a project or work together. A memorandum of understanding includes all the focus of attention on the agreement and the output of the parties who are involved in its making. To make the MOU agreed between the parties, the parties are required to sign on the basic terms and conditions of the MOU. A memorandum of understanding also indicates the origin or the beginning of the discussion regarding the process. Many private organizations and even companies adopt the MOU and also many government agencies adopt MOU in order to start any project or work.

What Do I Sign in an MOU?

The contents and the format of an MOU

When parties sign a memorandum of understanding or MOU between them, they are required to be clear and transparent to each other. This transparency will make them aware of what to anticipate from their partnership and the way their partnership will move ahead to attain their own desired target. These are normally added in the memorandum of understanding:

1. The Intent - The intent is to explain what will be the goals of entering into this agreement.

2. Details of the Parties - Who are the specific parties who are part of this memorandum of understanding, they should mention their own names and details which are required to fill in MOU. 

3. Term of MOU - In this section, the parties clearly state for how long is their involvement. Their agreement comes to an end with the date mentioned in MOU.

4. Responsibilities of Parties Involved - In this section, the responsibilities of the parties are being included, the responsibilities which are to be fulfilled by the parties are included here. The parties state all their combined responsibilities that they do among the parties who have signed the MOU together.

5. Disclaimer - The parties are required to keep themselves apart from these procedures, authority, and the facts, which are to be laid down in the disclaimers from before. If there is any controversy in the settlements, then it should be mentioned in this section.

6. Financial Section - The financial section involves all the financial settlements in detail in the MOU. In this matter, they need to be totally transparent, and the revenue which is made should be clearly stated, and also the interest that has to be paid is to be clearly mentioned.

7. Risks Sharing - If there is any sort of risk that is to be borne during their partnership, the party should adopt it. All the risk which arises can be under the control of the party or it can be involuntarily shared at times. 

8. Signatures - The signature of the parties who are involved in a business are taken. This is done as it will imply that they had agreed to all the terms and conditions which are being covered in the memorandum of understanding.

Why Should Parties Enter into MOU?

MOU has its own advantages, and thus the parties should enter into an MOU. The advantages of MOU are as follows:

1. The MOU layouts all the Roles and responsibilities of the parties who are involved in the project or in the work together.

2. The MOU is always a way better option than all the verbal commitments.

3. The MOU provides a good reference if there is any dispute which will occur between the two project partners.

4. The MOU also showcases the intention of the parties who are working towards a single goal.

5. The MOU is pretty straightforward and stress-free than any legal contract.

6. While the two countries are signing the MOUs, the restriction which is being made under international law can be neglected.

Is MOU Legally Binding in Our Country?

The term MOU or Memorandum of Understanding is commonly used for any non-binding contract, which is to be described by the intentions of two people or any two businesses to work in a consensus manner. An MOU in India is, thus known as ‘the Letter of Intent.

In the modern business world, business organizations enter into different kinds of agreements while carrying out their own business. These business organizations, at the time of negotiating with their potential business partners, their joint ventures, vendors, and their agents usually enter into a preliminary or initiation agreement, this is the first friendly step towards a possible alliance.

This agreement is here termed as the ‘Memorandum of Understanding’. However, there exists dubiety whether Memorandum of Understanding (which is MoU) is legally binding in India or not.

Legally Speaking, What is MOU?

The main question is whether MOU is a legal contract or not? 

As per the Indian Contract Act, 1872, all agreements are not a contract. Only those agreements which are legally binding are called contracts. They are enforceable by the law courts. Hence, this raises the question of whether MOU is legally binding in India?

Section 10 of the Indian Contract Act, 1872 had laid down the essential agreements which are legally binding in an agreement or a contract. The requirements are as follows: 

• An agreement must be an offer made by one party and accepted by another party.

• The consent of the parties should be free and not affected by any fraud, coercion, or by undue influence.

• The parties must be competent to enter into a contract, which means they must be more than the age of 18 years, they should be of a sane mind, and they are not to be considered insolvent or bankrupt.

• There must also be a lawful consideration between them, like money.

• There must be a lawful object or intent.

• There should be the intention to create legal relations between the parties.

If all these are present in your MOU, then the MOU is a valid and legal contract.