Memorandum of Understanding

A Memorandum of Understanding, also known as MOU, is an agreement between two or more parties outlining the terms and conditions of an intended transaction. This is the first stage of the formation of a formal contract.

This document describes the parties, the project or transaction, the purpose of the MOU, general obligations of the parties, and the precise roles and responsibilities of the parties.

Ordinarily, the MOU is not legally binding, which means that parties are not obliged to comply with the provisions of the agreement. However, it indicates an intended common line of action.

On the other hand, the MOU can be legally binding if the parties have a completed bargain that has been settled by all the parties to the MOU. It will also be legally binding if there are all the elements of the contract, such as offer, acceptance, consideration, and intention to create a legal relationship, as described below:

• Offer. An offer occurs when the parties proffer something (for example, a business arrangement) to another.
• Acceptance. This is when all the parties accept all the terms and conditions of the MOU.
• Consideration. The consideration is the benefit, such as money or other money's worth bargained for by the parties to this MOU.
• Intention to create legal relation. It means that all the parties to the MOU intend to be bound by the MOU.

Overall, an MOU can either legally binding or not depending on how the MOU is drafted and whether all the elements of a contract are present in the MOU.

How to use this document

This document can be used at a contract negotiation stage between parties. This is the stage where parties are deliberating on the fundamental terms of the project. It can be used in cases where parties either do not imply a legal commitment or where the parties can not create a legally enforceable agreement.

After filling this form, all the parties must sign the document. If a party is a company, either two (2) directors or one (1) director and one (1) company secretary should sign the document and the common seal of the company may be affixed on the document.

If either of the parties is an individual, the party should sign and have the document attested to by at least one witness. If one of the parties is a blind or illiterate person (that is can not read or does not understand the import of this document), an interpreter should read the document in the language the party understands. Thereafter, the blind or illiterate party should affix their thumbprint on the document.

Applicable law

The general laws of contract apply to this document.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.