- The parties can mainly use the Memorandum of Understanding when they want to formally create a primary understanding and structure for working together.
- MOUs can help the parties create their objectives, responsibilities, and expectations before they have a formal agreement with each other.
- It helps the businesses to create common terms and conditions for a future partnership.
- Businesses also use MOUs to save the time, resources, and effort that they will spend while creating an agreement.
- It sets out the initial terms on which the parties can further negotiate, and if they want they can bind themselves into a formal agreement.
- When a company wants to close an agreement with another company but is not very certain because of their verbal commitments, they can enter into a MOU.
- The parties often tend to enter into an MOU when they are dealing with any governmental organisation, as it keeps them on the safer side if the negotiations are documented.
MOU | Full Form, Working, Content and Purpose