Kindly explain the difference between a conntract for supply of goods or services and a MOU. Urgengtly please.
From India, Calcutta
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From India, Calcutta
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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
From India, Pune
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3From India, Pune
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Dear friends,
I hope here MOU will mean Memorandum of Understanding, which refers to an agreement. An agreement can be either bi-partite or tri-partite. A memorandum or agreement is not a contract, but some terms and conditions of a contract are derived from an agreement. A contract is as per the Indian Contracts Act, whereas an agreement is dealt with under the ID Act in the case of labor-related matters. Trade Unions are parties in the case of agreements, whereas in the case of contracts, only a contractor and a principal employer are involved, etc., etc.
From India, Calcutta
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I hope here MOU will mean Memorandum of Understanding, which refers to an agreement. An agreement can be either bi-partite or tri-partite. A memorandum or agreement is not a contract, but some terms and conditions of a contract are derived from an agreement. A contract is as per the Indian Contracts Act, whereas an agreement is dealt with under the ID Act in the case of labor-related matters. Trade Unions are parties in the case of agreements, whereas in the case of contracts, only a contractor and a principal employer are involved, etc., etc.
From India, Calcutta
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Dear M.A.S. Qadri ji,
You are correct only in the meaning of MOU, i.e., Memorandum of Understanding. An MOU is merely a document describing a bilateral or multilateral agreement. It represents the will of the parties involved and lays down the understanding between them before finalizing a contract or agreement.
It's crucial to differentiate between an agreement and a contract. An agreement that is enforceable by law is considered a contract. While all contracts are agreements, not all agreements qualify as contracts. An agreement becomes a contract when it is entered into with the free consent of competent parties, for lawful consideration, with a lawful object, and not expressly declared void.
Other members are welcome to comment on this.
Thanks and regards,
Keshav Korgaonkar
From India, Mumbai
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You are correct only in the meaning of MOU, i.e., Memorandum of Understanding. An MOU is merely a document describing a bilateral or multilateral agreement. It represents the will of the parties involved and lays down the understanding between them before finalizing a contract or agreement.
It's crucial to differentiate between an agreement and a contract. An agreement that is enforceable by law is considered a contract. While all contracts are agreements, not all agreements qualify as contracts. An agreement becomes a contract when it is entered into with the free consent of competent parties, for lawful consideration, with a lawful object, and not expressly declared void.
Other members are welcome to comment on this.
Thanks and regards,
Keshav Korgaonkar
From India, Mumbai
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Dear friend,
MoU stands for "Memorandum of Understanding," which refers to a written statement summarizing the terms of a contract or a similar legal transaction with mutual comprehension among the parties involved in the agreement. It is made for the benefit of the parties or for the promotion of their developmental activities or functions with reciprocal help.
A contract is a formal or legally binding agreement, for example, one for the sale of property or one setting out terms of employment. Both of these documents are subject to legal scrutiny.
Suri Babu Komakula
From Canada, Calgary
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MoU stands for "Memorandum of Understanding," which refers to a written statement summarizing the terms of a contract or a similar legal transaction with mutual comprehension among the parties involved in the agreement. It is made for the benefit of the parties or for the promotion of their developmental activities or functions with reciprocal help.
A contract is a formal or legally binding agreement, for example, one for the sale of property or one setting out terms of employment. Both of these documents are subject to legal scrutiny.
Suri Babu Komakula
From Canada, Calgary
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Dear SRK & others,
Legally speaking, in terms of the Contract Act of 1872, there is no difference between a MOU and a contract where an MOU is also an agreement reached between two parties capable of entering into an agreement on a subject that is legally valid. In ordinary parlance, an MOU refers to a broad understanding reached between the parties, whereas a contract will be much more specific. In terms of HR, there could be a broad understanding with trade unions by way of an MOU to provide for a resolution of issues. For example, on wage revision, an understanding could be reached to provide a benefit of 25%, but details like pay scale, increments, etc., could be worked out mutually later. Thus, it can be said that an MOU is a prelude to a composite agreement giving broad terms of mutual understanding and has to be read along with a detailed agreement on the specifics to be reached later. An MOU, thus, brings an immediate truce to the problems with hope for a clearer understanding in the future.
Hope the above clarifies: KK
From India, Bhopal
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Legally speaking, in terms of the Contract Act of 1872, there is no difference between a MOU and a contract where an MOU is also an agreement reached between two parties capable of entering into an agreement on a subject that is legally valid. In ordinary parlance, an MOU refers to a broad understanding reached between the parties, whereas a contract will be much more specific. In terms of HR, there could be a broad understanding with trade unions by way of an MOU to provide for a resolution of issues. For example, on wage revision, an understanding could be reached to provide a benefit of 25%, but details like pay scale, increments, etc., could be worked out mutually later. Thus, it can be said that an MOU is a prelude to a composite agreement giving broad terms of mutual understanding and has to be read along with a detailed agreement on the specifics to be reached later. An MOU, thus, brings an immediate truce to the problems with hope for a clearer understanding in the future.
Hope the above clarifies: KK
From India, Bhopal
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You may become a contract subject to the Contract Act of 1872. A Memorandum of Understanding (MOU) is a document where two parties agree to do something on a future date or event. For example, two parties sign an MOU for consultancy, where one is the consultant and the other is the receiver. If the offer is complete against each other, it forms a contract, and there must be some consideration between the parties. An MOU, if accepted and not in violation of any law, is considered a contract.
Advocate Ravichandran
Supreme Court of India
From India, Thiruvananthapuram
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Advocate Ravichandran
Supreme Court of India
From India, Thiruvananthapuram
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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
From India, Mumbai
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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
From India, Mumbai
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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 perspective goes, an MoU has no legal enforceability if it is breached by any of the parties. Any agreement registered under the provisions of the ID Act before the registering authority will be valid; otherwise, it is considered null and void.
In cases related to the supply of goods, an MoU holds legal value, and courts often accept it as a binding document between the parties.
PKJain
From India, Delhi
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So far as HR perspective goes, an MoU has no legal enforceability if it is breached by any of the parties. Any agreement registered under the provisions of the ID Act before the registering authority will be valid; otherwise, it is considered null and void.
In cases related to the supply of goods, an MoU holds legal value, and courts often accept it as a binding document between the parties.
PKJain
From India, Delhi
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In my company, when I challenged the transfer policy of the management, arguing that why ladies in the 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 recognized 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.
From India, New Delhi
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From India, New Delhi
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MOU And Contracts
MOU
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.
1. A document that expresses mutual accord on an issue between two or more parties.
2. Memoranda of understanding are generally recognized as binding, even if no legal claim could be based on the rights and obligations laid down in them.
3.Include each parties requirements and responsibilities. This is more expeditious than other forms of documentation.
4. An MOU is far more formal then a handshake and is given weight in a court of law should one party fail to meet the obligations of the memorandum.
5. A memorandum of understanding is synonymous with a letter of intent (LOI), which is a non-binding written agreement that implies a binding contract is to follow.
6. To be legally operative, a memorandum of understanding must
(1) identify the contracting parties,
(2) spell out the subject matter of the agreement and its objectives,
(3) summarize the essential terms of the agreement, and
(4) must be signed by the contracting parties. Also called letter of intent.
7. The MOU is often the first stage in the formation of a formal contract.
MOUs can vary and be tailored to each organization’s or party’s needs. In brief, an MOU states or describes:
Contracts
A contract is an agreement entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. The elements of a contract are offer and acceptance by competent persons having legal capacity who exchange consideration to create mutuality of obligation, and, in some circumstances, do so in writing.
1. An agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract, although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.
2. Since the law of contracts is at the heart of most business dealings, it is one of the three or four most significant areas of legal concern and can involve variations on circumstances and complexities.
3. The existence of a contract requires finding the following factual elements:
a) an offer;
b) an acceptance of that offer which results in a meeting of the minds;
c) a promise to perform;
d) a valuable consideration (which can be a promise or payment in some form);
e) a time or event when performance must be made (meet commitments);
f) terms and conditions for performance, including fulfilling promises;
g) performance.
4. A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. (I will pay you $500 to fix my car by Thursday; the performance is fixing the car by that date). A bilateral contract is one in which a promise is exchanged for a promise. (I promise to fix your car by Thursday and you promise to pay $500 on Thursday).
5. At law, the remedy for breach of contract can be "damages" or compensation of money.
6. Contracts can be either written or oral, but oral contracts are more difficult to prove and in most jurisdictions the time to sue on the contract is shorter (such as two years for oral compared to four years for written). Proof of some or all of these elements may be done in writing, though contracts may be made entirely orally or by conduct.
7. In some cases a contract can consist of several documents, such as a series of letters, orders, offers and counteroffers.
8. There are a variety of types of contracts: "conditional" on an event occurring; "joint and several," in which several parties make a joint promise to perform, but each is responsible; "implied," in which the courts will determine there is a contract based on the circumstances. Parties can contract to supply all another's requirements, buy all the products made, or enter into an option to renew a contract.The variations are almost limitless.
9. Contracts for illegal purposes are not enforceable at law.
From India, Mumbai
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MOU
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.
1. A document that expresses mutual accord on an issue between two or more parties.
2. Memoranda of understanding are generally recognized as binding, even if no legal claim could be based on the rights and obligations laid down in them.
3.Include each parties requirements and responsibilities. This is more expeditious than other forms of documentation.
4. An MOU is far more formal then a handshake and is given weight in a court of law should one party fail to meet the obligations of the memorandum.
5. A memorandum of understanding is synonymous with a letter of intent (LOI), which is a non-binding written agreement that implies a binding contract is to follow.
6. To be legally operative, a memorandum of understanding must
(1) identify the contracting parties,
(2) spell out the subject matter of the agreement and its objectives,
(3) summarize the essential terms of the agreement, and
(4) must be signed by the contracting parties. Also called letter of intent.
7. The MOU is often the first stage in the formation of a formal contract.
MOUs can vary and be tailored to each organization’s or party’s needs. In brief, an MOU states or describes:
- Who the partners are and their contact information
- What it is they are going to be working on, the background of the project and why the MOU is being entered into
- The scope of the document and who will use what the MOU provides
- Specified activities, if already determined
- Implementation of activities
- Funding issues
- Each party's roles and responsibilities
- A time line, if desired
- Duration of agreement
- A signature and date of signature by all of the parties agreeing to the MOU
Contracts
A contract is an agreement entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between or among them. The elements of a contract are offer and acceptance by competent persons having legal capacity who exchange consideration to create mutuality of obligation, and, in some circumstances, do so in writing.
1. An agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract, although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.
2. Since the law of contracts is at the heart of most business dealings, it is one of the three or four most significant areas of legal concern and can involve variations on circumstances and complexities.
3. The existence of a contract requires finding the following factual elements:
a) an offer;
b) an acceptance of that offer which results in a meeting of the minds;
c) a promise to perform;
d) a valuable consideration (which can be a promise or payment in some form);
e) a time or event when performance must be made (meet commitments);
f) terms and conditions for performance, including fulfilling promises;
g) performance.
4. A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. (I will pay you $500 to fix my car by Thursday; the performance is fixing the car by that date). A bilateral contract is one in which a promise is exchanged for a promise. (I promise to fix your car by Thursday and you promise to pay $500 on Thursday).
5. At law, the remedy for breach of contract can be "damages" or compensation of money.
6. Contracts can be either written or oral, but oral contracts are more difficult to prove and in most jurisdictions the time to sue on the contract is shorter (such as two years for oral compared to four years for written). Proof of some or all of these elements may be done in writing, though contracts may be made entirely orally or by conduct.
7. In some cases a contract can consist of several documents, such as a series of letters, orders, offers and counteroffers.
8. There are a variety of types of contracts: "conditional" on an event occurring; "joint and several," in which several parties make a joint promise to perform, but each is responsible; "implied," in which the courts will determine there is a contract based on the circumstances. Parties can contract to supply all another's requirements, buy all the products made, or enter into an option to renew a contract.The variations are almost limitless.
9. Contracts for illegal purposes are not enforceable at law.
From India, Mumbai
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Dear Saibhakta,
Since the management states that they have only an understanding with their recognized unions for not transferring the women employees, it means they do not have a proper agreement to back this policy. Although our Constitution prohibits discrimination on the basis of sex, certain protective discriminations are permissible. But in this specific case, since all other terms of employment are the same, discrimination on the basis of sex for the transferability of the employees is not a valid policy.
Regards,
KK
From India, Bhopal
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Since the management states that they have only an understanding with their recognized unions for not transferring the women employees, it means they do not have a proper agreement to back this policy. Although our Constitution prohibits discrimination on the basis of sex, certain protective discriminations are permissible. But in this specific case, since all other terms of employment are the same, discrimination on the basis of sex for the transferability of the employees is not a valid policy.
Regards,
KK
From India, Bhopal
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