What is The difference of MOU and Agreement ?
Guest
(Querist) 04 August 2010
This query is : Resolved
why big businesses use MOU(Memeorandom of understanding) instead of Agreements ?
But friends what is difference in legal value of MOU and "Agreement".Why MOU is more fashionable in business world these days?
Devajyoti Barman
(Expert) 05 August 2010
Strictly speaking nothing. Generally the joint business ventures are addressed as MOU.
Daksh
(Expert) 05 August 2010
The Agreement as per the stipulation of Registration Act needs Registration and require stamp duty the Memorandum of Understanding are nothing but means of getting away from the payment of Stamp duty.
Best Regards
Daksh
S. Bharath
(Expert) 05 August 2010
I remember to have answered a similar query: MoU, as the name goes, records what was agreed in the past- it is a "Memorandum". Whereas an agreement is a current document. In other words, a Memorandum recollects a prior understanding whereas an agreement itself bears the understanding. Accordingly, with a slight modification to what Daksh has said, the STAMP ACT requires an agreement to be stamped, whereas an MoU need not be. In business transactions, much of discussions and decisions would have been forged much before the actual recording of the understanding and therefore an MoU is more appropriate. Further, in complex business such as JV as stated by Barman, there are several modules and therefore the Agreement has several dimensions not specifically provided for by the Articles of Stamp Act, therefore it is better to term it as MoU rather than set out to describe the nature of the Agreement. One other reason, though insignificant for discussion is that MoU is considered more fashionable than Agreement!
