The answer can be looked upon for by analyzing Section 10 of the Indian Contract Act, 1872. Now the question arises whether MOU is a valid legal document in the eyes of the court. It might specify the name and specifics of the parties the reason and objectives for which the MOU is being arrived at the arrangement for periodical meetings between the parties the measure of capital commitment to be made by each party the insights regarding role, responsibilities, and remuneration the duration of such an agreement and the like. It clearly outlines explicit purposes of an understanding. In other words, MOU can be viewed as the beginning stage for negotiations as it defines the scope and purpose behind the discussions, for example, merger talks in business bargains, and additionally, they can be kept secret by the parties, if they intend to do so. The purpose of arriving at a MOU is to comprehend the expectations of each party before they actually execute a contract, moreover it doesn’t create rights of either of the parties rather it just expresses their willingness to enter into a contract in the future.
MOU is commonly executed to outline the rights and obligations of the parties for making accord between the parties to the agreement who are looking for entering into future agreements and is typically not intended to have created any obligations upon the parties. It is a document featuring the expectation of the contracting parties and may likewise be known as a Letter of Intent (LoI).
A Memorandum of Understanding (MOU) is commonly a fundamental comprehension between at least two parties, before the execution of a proper understanding viz.
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