Memorandum of Understanding (MOU)

It depends on the language. An MOU can be entirely non-binding, entirely binding, or partly each. Courts in India have held that even documents labelled 'MOU' or 'LoI' are binding if the language is sufficiently certain and evidences an intention to create legal relations.

These terms are used interchangeably in different industries. A term sheet is common in investment contexts. An LoI is common in M&A. An MOU is used for partnerships and government engagements. The legal effect depends on the language, not the label.

If one party will incur significant due diligence or preparation costs in reliance on the MOU, a break fee (payable if the other party walks away) protects that investment.

The MOU ceases to operate. Any binding provisions that have not been converted into a final agreement stop being enforceable. Including a clear expiry date prevents an MOU from lingering indefinitely.

An MOU that records a binding obligation may require stamp duty in some states depending on the nature and value of the obligation. An entirely non-binding MOU typically does not. We advise on stamp duty requirements for your specific MOU.

Yes, by written agreement of both parties before it expires. The extension should be signed and dated.