Memorandum of Understanding

A Memorandum of Understanding (MOU) is a legal agreement between two or more parties. Individuals and companies use MOUs to formalize their relationships. MOUs are typically the first steps toward a legal contract or agreement. It is also known as a ‘letter of intent,’ which is a non-binding legal agreement that suggests the execution of a legal contract.

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Memorandum of Understanding

Advantages OF Memorandum of Understanding

Establishes A Common Intention:

      • Both parties must understand each other’s aims and objectives in every business deal. 
      • An MOU may be highly beneficial to your company relationships. 
      • With clear conditions and good communication and transactions, it is quite helpful.

Reduces Risk Of Uncertainty:

      • Business discussions may be difficult and unclear at some times. They might be particularly foggy in the start of a relationship between the parties.
      • Nothing worse than a disagreement with a business partner about agreed terms. 
      • As a result, memorandums of understanding (MOUs) are excellent protection for reducing the risk of misunderstanding in priorities.

Records Prior Agreements:

      • Specific terms that will be included in the final agreement are frequently approved during discussions between two or more parties. The MOU is useful if a party withdraws or forgets these terms.
      • Although the document is not legally binding, it is helpful since it documents what was agreed upon during the negotiating process.
      • Mostly, as a result, the parties have explicit knowledge of everybody’s mutual goals.
      • As long as the conditions are clear, an MOU may help parties develop beneficial relationships. An MOU is an excellent place to start since it spells out what both parties want to get out of the agreement. 
      • As a result, if you wish to terminate the agreement after being created, you must follow a formal termination procedure. This can be more difficult, stressful, and costly.

Provides A Framework For Future Dealings:

      • An MOU might set our minds at ease. Having the intended terms already established in a preceding document offers a framework for future transactions. 
      • If there would be any doubt, the MOU can resort as a reminder of the parties’ aims and intents.

Secures The Partnership:

The master service agreement covers the whole connection between the business owner and the customer, and it covers all aspects of the contract that are likely to arise. Anyone starting a long-term relationship with a dealer or client will benefit from such a contract.


A master service agreement provides a framework for considering and negotiating terms and conditions. As a result, the same terms do not need to be arranged repeatedly for identical or related agreements.


The following information must be included in an MOU between a recipient and sub-recipients, as well as a third-party service provider.

      • Agency Information:
      • Identification details for the recipient or sub-recipients, as well as contact information.
      • Identifying information about the service provider’s points of contact.
      • Third-party service providers’ absolute assurance to provide service.
      • Description of services to be provided.
      • Provision of the scope of services.
      • Specific contract to be matched.
      • Duration of the contract.
      • Point-in-time number of clients receiving service.
      • The total number of clients served throughout the contract.
      • Qualifications of service providers.
      • The determined value of services provided.
      • Service match documentation.
      • Requirements and duties for documentation for service providers and recipients.
      • Timelines for delivering services to individuals that are standard for both service providers and consumers.


  • The agreement’s detailed points are accurately described in the memorandum of understanding format. Identify the parties, describe the aspects to which they have agreed, identify their scope, and detail the parties’ roles and responsibilities.
  • Although it cannot be legally enforced, the MOU is a significant advancement due to the time and effort of organizing and writing sufficient documents. To sign a memorandum of understanding, the participants need to reach a mutual agreement. At the same time, each party will get the next most important thing before moving on.
  • This approach often includes each participant effectively writing their own memorandum of understanding. Consider your ideal or chosen outcome, what you believe you must deliver to other parties, and which issues are non-negotiable for you. This is the beginning point for the parties’ negotiations.

Stamp Duty On Memorandum Of Understanding:

Normally, no stamp duty is imposed on memorandums of understanding. However, if the MOU integrates a purchase agreement for fixed property, the stamp duty shall be greater than Rs 100/-. It should be stamped if it is used in court.

This organizes the legal merit and is accepted as evidence in a court of law. The document will not be allowed as evidence if it is not properly stamped.

procedure for memorandum of understanding

Step 1

We work with qualified lawyers. Our platform connects you with reputable lawyers.

Step 2

Lawyers will prepare your agreement.
Within four days, you will receive the first draft.

Step 3

Revisions are free!
Two rounds of revisions are included at no additional cost.

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FAQS on a memorandum of understanding

An MOU is not legally binding, but it signals the parties' willingness to proceed with a contract. The MOU can be viewed as the starting point for negotiations because it specifies the scope and goal of the discussions.
Such records are commonly noticed during international treaty talks and may be used in high-stakes business transactions such as mergers. An MOU is not a legally binding contract. It is commonly used for non-binding. If an MOU is drawn for consideration, such as money replacement, the document becomes more binding on the parties; otherwise, it is a non-binding contract.

The MOU format for property sale is prepared by any business or individual with clear title, finalizing the full and final settlement of a property sale before getting the rights to execute the transfer of title, which are subject to certain conditions of the discussion between parties, which are laid out in the form of an MOU, which is a simple document between the parties. It will also include both parties' mutual understanding and serve as a foundation for drafting a formal contract later on.

      • Step 1: Log on to the legaltoast website and access the MOU form.
      • Step 2:To get the MOU online, fill in the information of the parties' transaction conducted under the memorandum of understanding format, duration, arbitration, and a few other inquiries.
      • Step 3: Lawyers will prepare the memorandum of understanding, including all of the relevant elements, and it will be available for download.

This will be determined by the required review time, mainly if the documents originated at the external business and require General Counsel review.

No, however, consult with the appropriate administrative review office. If a review is required, that office will determine it.

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