Abuhrd
Employee Establishment & Administration,
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
Kknair
Hr, Ir, Law, Disc. Matters
SAIBHAKTA
Retired From Air India
Pkjain62
Service As Dgm-hr/legal
+5 Others

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Kindly explain the difference between a conntract for supply of goods or services and a MOU. Urgengtly please.
Dear, MOU - Minutes of meeting - only the discussion done with the parties. Contract - Terms finalised for services between both parties along with signature with wittness. Regards, Sanjay Mulay
Dear friends,
I hope here mou will mean memorandum of understanding, which refers to an agreement , which again may be bi-partite or tri-partite. A memorandum or agreement is not a contract but some terms and conditions of a contact are derived from an agreement. A contract is as per the Indian Contracts Act whereas an agreement is dealt as per the ID Act in case of labour related matters. Trade Unions are party in case of agreements whereas in case of contracts only a contractor and a principal employer are involved etc.etc.

Dear M.A.S.Qadri ji,
You are correct only in meaning of MOU i.e. Memorandum of Understanding.
MOU is only a document describing a bilateral or multilateral agreement. It is only a will of the parties. It is only a document of an understanding between the parties before finalizing contract or agreement.
There is a difference between agreement and contract. An agreement enforceable by law is a contract. All contracts are agreements but all agreements are not contracts. Agreement is a contract if it is made by free consent of parties competent to contract for lawful consideration and with lawful object. And the same is not expressly declared to be void.
Other members can comments on this.
Thanks and regards.
Keshav Korgaonkar

Dear friend,
MoU is nothing but " Memorandum of Understanding : which means a written statement summarizing the terms of a contract or a similar legal transaction with mutual comprehension of parties involved in the agreement made for the benefit of the parties or for promotion of their developmental activities or functions with reciprocal help.
A contract is a formal or legally binding agreement, e.g. one for the sale of property, or one setting out terms of employment.
Both the documents are subject to legal scruitiny.
Suri Babu Komakula

Dear SRK & others, Legally speaking, in terms of Contract Act 1872, there is no difference between a MOU and contract where MOU is also an agreement reached between two parties capable of entering into an agreement on subject which is legally valid. In ordinary parlance, MOU refers to a broad understanding reached between the parties whereas contract will be much more specific. In terms of HR, there could be a broad understanding with trade unions by way of MOU to provide for a resolution of issue, for example on wage revision understanding could be reached for giving a benefit of 25% but the details like pay scale, increments etc could be worked out mutually later. Thus it can be said that MOU is a prelude to a composite agreement giving broad terms of mutual understanding and has to be read along with detailed agreement on the specfics to be reached later. MOU, thus brings a immediate truce to the problems with a hope for more clear understanding in future.

Hope the above clarifies: KK

Mou may beecome a contract subject to contract act 1872. A memorandum of understanding is a document where two parties agree to do something on a future date or is an event, for example two parties sign an MOU ffor consultancy where one is the consultant and the other is the receiver. Now if the offer is complete against each other it is a contract. There must be some consideration between the parties. MOU if accepted, and is not in violation of any law is a contract.
Advocate Ravichandran
Supreme Court Of India

Dear KK ji,
With due respect to you Sir, I disagree to your first sentence which says- “Legally speaking, in terms of Contract Act 1872, there is no difference between a MOU and contract”. However, I agree with Advocate Ravichandran who said that MOU may become a contract subject to contract act 1872.
To add, I will say MOU is just a mutual consent or understanding. It is just a proposal. It is not a concluded contract.
According to my understanding, MOU possesses legal value as evidence in the eyes of law. It has no legal enforceability as such. But it is a very useful tool. You may convert MOU as a part of contract.
Legality of MOU arises when any party fails to perform the understanding reached. Even in HR prospective, if you agree to dis-agree the understandings reached with Union, what will be the legal effect?
Thanks with regards.
Keshav Korgaonkar

A memorandum of understanding (MoU) is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen's agreement.
So far as HR prospective a MoU has no legal enforceability if betrays by any of the party. Any agreement registered under the provisions of ID Act before the registering authority only will be valid otherwise it is nullity.
So for if it relates to supply of goods it has legal value and often courts accepts it as a binding documents between the parties
PKJain

In my company when I challenged the transfer policy of the management ,arguing that why ladies in same cadre appointed on the same terms and conditions to the same post of 'traffic assistants' are not transferred ,the management replied that they have an understanding with the recognised employees union so as not to transfer them.Would the court of law accept this or shall the court reject it as discrimination based on gender ? Someone please clarify.

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