Most commonly, contracts involve the exchange of promises, e.g., “I promise to play for you, if you promise to pay me Rs. Generally, parties create a contract the moment that one party’s offer to do (or not do) something in exchange for something else of value is accepted by the other party, either expressly or impliedly. The parties must intend to create a legally enforceable agreement, but they need not intend to create – or even understand – that they are entering into a “contract.” The essential part of contact are (1) Parties (2) Lawful offer or proposal (3) Lawful acceptance, (4) Promise, (5) lawful Consideration and legally enforceable by law. 1. There must be a "lawful offer" and a "lawful acceptance" of the offer, thus resulting in an agreement. The Indian contract Act 1872, Section 2(h) defines the term contract as an agreement legally enforceable by law, for the formation of a contract there must be an agreement, the agreement should be enforceable by law. If so, they have likely created a legally enforceable contract or agreement regardless of whether they call it a contract or an MOU.Ī contract is a legally enforceable agreement between two or more parties with mutual obligations. The main thing is whether the parties aimed to be legally bound by the terms of the agreement or contract. There can be legal distinctions between MOU and MOA, there may be no legal or practical difference if they are written with similar language. The MOA can also be a legal document that is binding and hold the parties responsible to their commitment or just a partnership agreement. The purpose of an MOA is to have a written understanding of the agreement between parties. It is a more formal alternative to a gentlemen’s agreement, but generally lacks the bind power of a contract.Ī memorandum of agreement (MOA) or cooperative agreement is a document written between parties to cooperatively work together on an agreed upon project or meet an agreed upon objective. It expresses a convergence of will between the parties, indicating an intended common line of action, rather than a legal commitment. A memorandum of understanding (MOU) is a legal document describing a bilateral agreement between parties.
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