Buying property, investing in a company or concluding a partnership a
memorandum of understanding (MOU) is a document that is usually taken for
granted and a lot of information entailed in those pages are generally
disregarded. Yet, being the most important document signed between the parties
prior to any concrete contractual document.
Hence, Top Lawyers in UAE have highlighted 5 notable points which shall be
considered prior to sign a memorandum of understanding as below:
Commercial Arrangements
It is apparent from the general practice that MOU is drafted to put forth
the commercial arrangements agreed between the parties on a piece of paper.
However, we advise our clients to carefully scrutinize the legal aspects of
the commercial arrangements prior to signing the MOU. It is pertinent for
the parties to give attention to the legal clauses provided, if any and
raise concerns to comprehend the very intention of the clause and clarify
the issues before making any commitment.
Re-Review your rights and obligations
Why we say re-review as obviously, we want you to be assured of your rights
and obligations under the MOU and to understand if you will be able to
fulfill your commitment or contractual obligation. Most importantly, you
must very carefully peruse your obligations and commitments that can be used
against you and on off chance can land you in difficult situations.
Reasonable Investment
In several cases where parties are tight on the budget and resources, the
MOU can essentially assist the parties and is comparatively a cheap
investment. Generally, MOU is drafted to include the initial offer, rights
and obligations of parties, opportunity to conduct due diligence, financial
obligations and termination of the arrangement. In a nutshell, the MOU has
all necessary clauses which are sufficient to frame contractual obligations.
Termination of MOU
Agreements are not perpetual as they have a limited time period or should
involve clauses for early release of contractual obligations. Thus, to
ensure a smooth exit from the MOU, you must ensure that the MOU allows you
to terminate the arrangement should there be a default or delay from the
other party. Importantly, either party shall comprehend their situation
based on the MOU and reasons which may lead to termination of the contract
and put forth such clauses upon mutual consent.
Appoint a legal consultant / Lawyers in UAE
Legal terminology is not easy to understand and may have different meanings
in different circumstances. Therefore, signing the MOU without really
understanding the legal jargon would invite unwanted legal repercussions. In
such cases, it is inevitable to appoint a legal consultant who can review
the very of the MOU and can prevent you from entering into an unfavourable
agreement.
Written By: Dr Hassan Elhais, along with his team of prominent l legal
advisors & lawyers in UAE, has become famous as an eminent pro in the fields
of civil law, company incorporation, construction law, maritime law, banking
law, criminal law, family law, inheritance law, and arbitration.
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