Memorandum of Understanding (MOU)

A Memorandum of Understanding (MoU) is a document in which two or more parties declare that they agree on a common course of action. It is formal agreement and is not legally binding on its parties. To be legally operative it should clearly lay down the name of the parties, object of the contract and summarise the important terms and conditions. They are usually less time consuming and avoid legal implications as involved in a contract. This is because a legal agreement contains the risk, warranties, and indemnifications because of the nature of the contract involving the exchange of money or other considerations to validate it. MOU provides a roadmap to a non-binding agreement highlighting effective negotiations between the parties involved to achieve a shared goal.

What Is The Process?

1) To produce an MOU, the participating parties need to reach a mutual understanding. 

2) In the process, each side learns what is most important to the other before moving forward.

3) The process often begins with each party effectively drafting its own best-case MOU through a professional skilled in the process. 

4) It considers all ideal or preferred outcomes, what is being offered to the other party(s), and what points may be non-negotiable. 


As it can be appreciated, time taken for contract drafting depends largely on the complexities of the subject matter covered. But on an average, we conclude the process within 2 to 4 working days.

Details Required

1) Names of the parties.

2) Specific points of understanding between the parties considering the subject matter.

3) Description of the project/understanding; which is the subject matter of the agreement.

4) Details outlining each parties’ roles and responsibilities.


1 Is an MOU a legally binding document?

MOUs aren’t legally binding per se. MOUs are mere understandings between two parties that are legally documented but are not binding on the parties. However, if an MOU is drawn up for the exchange of money, it becomes legally binding due to the presence of consideration.

2 Should stamp duty be paid on an MOU?

MOUs, usually, are not affixed with a stamp duty, however, a stamp duty paid document is considered as having evidentiary value and is hence admitted in the court. Therefore, if an MOU is drawn with respect to immovable property or money as consideration, having stamp duty paid on the document is advisable.