Memorandum of Understanding (MoU) is an agreement between two or more parties outlining the rights and obligations of the parties to the agreement. It is generally made when parties are into initial discussions.
So, the major features of the oral discussions between the parties are laid down in the form of a Memorandum of Understanding, which includes:
- A simple document that formalizes the first level of discussions between the parties.
- The common understandings between the parties, and
- It serves as a basis for making a formal contract later on.
Major contents of Memorandum of Understanding
A Memorandum of Understanding should have the following features:
- Identify the parties: It should specify the name of the parties between whom memorandum of understanding is being signed.
- Purpose: It should clearly specify the purpose and the goals for which the memorandum is being signed.
- Duration: The memorandum should specify the duration of such an agreement between the parties i.e the beginning and the ending dates of the memorandum. Also, it should provide for the circumstances in which such memorandum will be terminated.
- Meeting and Reporting: It should specify the plan for the meetings between the parties. For instance, parties can decide to meet at least once in a quarter.
- Financial Considerations: The memorandum should specify the amount of capital contribution to be made by the parties. It should also mention the person authorized to make the major financial decisions. The financial record keeping of the assignment/program being undertaken should also be maintained.
- Management: The memorandum may provide for the appointment of the persons to take care of the day to day operations of the program. The role, responsibilities, and remuneration should also be mentioned.
- Signed with dates: Once the MOU is prepared and agreed upon by parties involved, it should be signed and dated by the authorized individuals representing each party or organization.