What is the difference between an MoU and MoA?

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Posted on 16-Mar-17

Advocate default

Answered on 22-Nov-17

MOA- refers to a Memorandum of Association that every company formed under the Companies Act shall have and it broadly stated the objects of the company. MOU- refers to a Memorandum of Understanding and is also referred interchangeably as an LOI (letter of intent). This is a document that would capture the "tentative" understanding between parties, which is subject to fulfilment of certain conditions upon the happening of which parties shall enter into more definitive agreements with each other. However, more often than not MOUs are drafted like an agreement itself thereby withering away the distinction between an MOU and an agreement. My suggestion would be to avoid use of the MOU is you are entering into conclusive and definitive understanding, which would require an agreement. An MOU normally precedes and agreement since it is just the record of initial understanding between parties and should be non-binding in nature.

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