Memorandum of agreement is generally presented in business where two parties agreed to work together on a project or meet any agreed objectives. Such a document outlines the cooperative terms that two parties should follow while working in a partnership. Even a clear lineation would also be provided about the responsibilities each of the partners should follow and benefits acquired by each of them.
However, unlike an official business contract, the memorandum of agreement does not bind the two parties legally; instead it simply recites the common objective and interest one should abide by while working in partnership. To obtain the benefit of this document enormously it has to be constructed efficiently and with precision. Hence, while documenting this agreement one should take in account the following points to be included.
- Introductory Info: The initial paragraph of the agreement document recites the detail that identifies the concern parties and also mention about the objective or purpose of the contract. Incase, if one of the party is a government authorized body, then legislations defining its policies are often included on the first paragraph.
- Defining Responsibilities: Following the initial paragraph, the body of the agreement document lists the stipulated responsibilities that are needed to be performed by both the parties involved. It also helps them to realize what each of them should contribute. These lineaments have to be discussed in details so that the parties involved gets a clear idea regarding their commitments and can also have reasonable expectation of the same commitments from the other party as well.
- Obligations: The terms or obligations specified for the particular agreement helps the parties to identify the tenure for which the document will remain valid and the procedures through which it can be terminated. However, additional terms or obligations could be added depending upon the requirement and conveniences of the involved parties. Though a memorandum is not binding, but it has to be authorized by the Federal laws of the court.
In general, the memorandum of agreements has various advantages over the formal contract documents. One of the significant among them is that such an agreement can be enforced without a parliamentary approval and changes can be made in the contract document according to the internal laws and subject of agreement between both the parties involved. That is why memorandum of agreement is highly preferable in US businesses even for making international partnerships as obligations under international law can also be avoided through this agreement document.