Contract
Shiva Kant Dixit
(Querist) 08 September 2010
This query is : Resolved
What is difference between MOU and an Agreement.
A V Vishal
(Expert) 08 September 2010
The legal definition of a contract is: An agreement between two or more persons that creates an obligation to or not to do a particular thing.
A contract is an agreement, enforceable by law, and this is the real test. As long as an agreement does not involve the law, it would fall outside the purview of a contract. However, once the law can be called upon to play a role in some capacity, the agreement, immediately, becomes a contract. All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Every promise and every set of promises forming the consideration for each other is an agreement. An agreement enforceable by law is a contract.
Consideration forms an essential part of an agreement without which the agreement is void. This is because, in the absence of consideration, there is no legal obligation formed between the parties and, therefore, in such a scenario, they are not bound by the terms of the agreement.
Consideration is nothing but the price paid by one party for the promise of the other. It can be in the nature of a positive act or the forbearance of a certain act. It can be past, present or future.
Most people use the two terms synonymously but, from a legal standpoint, there is an important difference. All contracts are agreements but all agreements are not contracts. Analytically put, this would mean that agreements are the genus of which contracts are the specie.
An agreement needs the following essentials:
A proposal/offer
An acceptance
A promise
A consideration for the promise
MOA stands for Memorandum of Agreement and MOU stands for Memorandum of Understanding. They are both used as written agreements between two parties. There is no established legal difference. The two terms are interchangeable. Because it contains the word agreement, and a contract is an agreement, some people believe that an MOA signifies a more significant commitment than an MOU. So if you are having difficulty with entering a partnership using an MOA, then see whether your potential partner wants to sign an MOU.
An MOU/MOA is like a contract, but it doesnt have to carry the same legal weight. That is because an agreement doesnt need to be intended as a legally enforceable arrangement, but a Contract always is intended that way.
However, an MOA can include any or all of a contracts terms and conditions. If it includes all of them, but is just titled an MOA, it can carry as much legal weight as a contract.
Valid contracts: There are five essential prerequisites for a valid contract:
There should be a proposal and an acceptance.
The consideration must be lawful. For example, one cannot enter into a valid contract for smuggling or for black marketing or selling goods above a government-controlled price.
Both the parties must be competent to enter into the agreement. In other words, there should be no legal barrier like age or one of the parties being a non-authorized person, or of unsound mind.
There must be a free consent of both parties. In other words, the consent shall not be by coercion or fraud or misrepresentation.
The agreement should not expressly be declared to be void.
Uma parameswaran
(Expert) 09 September 2010
MoU always prepared initialy and the members can enter into many agreement for different matters within in one project.
