What is an MOU?

An MOU, also known as Memorandum of Understanding is a record of the understanding of two or more people participating in a business idea.

This document is often used as a starting point to set up businesses, joint ventures or business collaborations.

Generally, an MOU is not considered to be a legally binding document. It has the same validity as minutes of meetings.  If the parties wish to make any aspects of the MOU legally binding, they must expressly say so in the MOU.

What are the important parts of an MOU?

Some of the most important aspects of an MOU that you should consider spending time discussing are:

1. Scope of collaboration - how will the parties work together, what do they plan to do and their respective roles in the business.

2. Duration - make the duration of your MOU time limited. We recommend no more than three months. This puts pressure on the other parties to commit e.g sign a legally binding document such as a Shareholders Agreement or Joint Venture Agreement, or exit the MOU.

3. Confidentiality - keeping the arrangements secret and not disclosing the same to third parties.

4. Law & Jurisdiction- deciding which laws will govern their arrangements or disputes.

Learn more, contact us for further support.

Arkhurst & Abdellah Solicitors, Creative Tower, 17th & 18th Floors, P. O. Box 4422, Fujairah, UAE.