![]() If all the conditions are fulfilled under Indian Contract Act then the parties have a right to make the other party specifically perform the contract under the Specific Relief Act, 1963, if the compensation is not quantifiable. To make it a valid agreement, the parties in an MoU should have a legally binding relationship to enter into an agreement. MoU should contain a clause which talks about the termination of an agreement wherein under certain circumstances, any of the parties’ courts terminate their agreement at a given point of time.Īs per Indian law, MoU is only enforceable in a court of law when it fulfills the provisions of the Indian Contract Act, 1872.It should be specified in the MoU about the clauses concerning the allocation of risks and dispute resolution as whenever a conflict of interest arises between parties or any legal injury happens to any one of the parties, it should be cleared in the MoU who will be liable for the loss.All information regarding payment and finance should be defined clearly. There should be a clear understanding between the parties regarding the duties and responsibilities.In an MoU, a specific date and time should be mentioned on which it is started and ended.First and foremost, it is important to determine the intent of parties who need to enter into an agreement and there should be at least two parties to enter into an MoU.There are further some essentials that need to be complied with to make an MoU valid: As to determine the validity of a contract, we look at Section 10 of the Indian Contract Act, which determines the essentials of a valid contract, the same goes with an MoU. ![]() In most scenarios, MoUs are legally not valid but in a situation where it fulfills all the three essentials of Section 10 of the Indian Contract Act, 1872, it is then said to be legally valid. MoU is not legally enforceable in the court of law until the agreement is signed or ratified between the parties or two nations. Essentials of a valid Memorandum of Understanding ![]() An MoU is mostly found in international relations, but it is commonly used in business agreements. When the parties arrive at a common consensus then they further indulge in negotiations and discussions and when these negotiations and discussions become successful then they finally enter into an agreement. It is a situation where nations arrive at a common parameter. It is more of an understanding between the two parties wherein they have some mutual understanding points and they do not disclose or violate any of the terms mentioned in an MoU. It is an agreement that is entered much before the parties enter into any future business agreement or arrangement. Penudhar JenaĪ Memorandum of Understanding (MoU) is a consensus between two or more parties or it can be between two or more nations to enter into a contract.
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