MOU and contract are two methods of going into a condition of consensus. Consensus is broadly discovered in business and individual marketing and offers facts and varied durations under which a particular assignment is to be concluded. The significant difference between MoU and a contract indicates that MOU is a consensus between two or more bodies that is not lawfully binding. A contract is a legally binding consensus between two or more bodies that produce a commitment to perform or not perform a specific assignment. Apart from the key difference, MoU and contract and both widely comparable in terms of the goals they wish to attain.
What is an MOU?
MOU, the short of a memorandum of understanding, refers to a consensus between two or more bodies where MoU is not intentionally a lawful enforcement between the two bodies. MOU may declare that the bodies consent to facilitate and fund the mutual use of facilities. However, this does not quantify a lawfully binding clause. MoU is a penned-down consensus in which the consensus representations are described and consented upon with the goals planned to attain. MoUs are usually initial phases towards lawfully binding contracts. Although an MOU is not legally implemented, it is bound to use estoppel. This clause prevents individuals from affirming a fact or liberty or precludes them from disputing it. However, if either entity does not agree to the representations of the MoU, and the other entity has suffered a defeat. As an outcome, the influenced entity can cover the failure.
What is a Contract?
A contract is a lawfully binding consensus between two or more entities that produce a responsibility to perform or not perform a certain assignment. Based on legal terms, the components described below should be available in a consensus to classify it as a contract.
- request and endorsement
- a purpose between the entities to produce binding connections
- deliberation to be reimbursed for the pledge made
- approval of the entities
- the ability of the entities to perform
- the legitimacy of the consensus
Varieties of Contracts
Listed below are the different varieties of contracts
An express contract is created verbally without a written consensus. An illustration is individual A and individual B going into a contract in which individual A is to trade a vehicle to individual B for a certain amount of money. The structure of the contract occurred via a phone call conversation.
A written contract is a consensus in which the representation of the contracts is noted in writing or printed arrangement. These are more plausible than express contracts of the apparent evidence. An illustration shows individuals A and B, employer and employee, respectively. They go into a contract in writing in which individual A employs individual B to conclude a certain assignment within an agreed time.
The executory contract is a process whereby the two or either member of the entity has not fully completed their assignment, which means the contract is still in advancement. Using an illustration has to do with Individual A, who goes into a contract with Individual B to buy a vehicle for a certain amount; Individual A has made the payment. However, individual B is yet to transfer the linked documents. At this phase, the contract is declared to be in the executory phase.
Difference Between MOU and Contract
- MOU is described as a consensus between two or more entities that are not legally binding. A contract is a lawfully binding consensus between two or more entities that produce a responsibility to perform or not perform a certain assignment.
- MOU is a written consensus, while a contract can be verbal or written.
- In an MOU, the tribunal does not implement conditions violating the MOU. In contrast, in a contract, the tribunal can enforce conditions violating contracts, in which the entity that did not agree to conclude the contract is bound to pay a fine.