What Does a Memorandum of Understanding Signify?
A memorandum of understanding or MoU is an agreement, which may be multilateral or bilateral, between two or more parties. It is an expression the intentions and relations between the respective parties. It indicates a line of action that is common between the parties dealing with off-plan projects or otherwise. It is usually put into use when the concerned parties are hesitant towards committing legally. The case might also be that it is not possible to come to an agreement that is enforceable legally. Either way it is a more formal alternative to what might be stated simply as a gentlemen’s agreement.
Is a Memorandum of Understanding Legally Binding?
The legality of the document as a legally binding contract depends on the absence or presence of four well defined legal elements. These elements, also often referred to as the ‘four corners’ are the intention, consideration, offer and acceptanceto be bound by the tenets of law.
Memorandum of Understanding: Companies and Governmental Law
MoU’s are put into use by various corporate firms as well as government agencies operating throughout Dubai in order to define relationships between agencies and companies. It is customary in UAE to refer to an MoU simply as a Concordat. It is primarily used tosolidify the business relationship between two parties.
MoU’s between parties over an off-plan project may also be used to declare their intentions in legal terms without the usage of legally binding provisions. Developers often prefer MoU’s for off-plan property as it benefits both parties in expressing the relation and agreements between them.