John Donne, an author and cleric in the seventeenth century, once said in his sermon that a person could not survive without the aid of another human being. People, even with their sufficient resources and strong-will, still need the helping hand of others in some situations. So, these individuals make deals with other groups to achieve goals or acquire materials they need. To organize specific arrangements with different businesses and people, a memorandum of agreement is available for the convenience of everyone. Learn more about this useful document by reading this informative article.
The advent of agriculture and the emergence of better technology was the signal for the rise of civilizations. People traded goods with neighboring cities and created systems of exchange. Commerce was the most natural thing to do—everyone needed products, raw materials, and services from other places. With the growing population and business ventures, a form of arrangement was required to organize things. With that, agreements became an essential tool for various project negotiations, partnerships, buy-and-sell deals, and other events.
A memorandum of agreement, also called MOA, consists of a formal action plan that directs how two parties working together accomplish their shared end-goal. It contains the outline of the objectives, roles, and benefits of the arrangement. However, a memorandum of agreement is not legally binding if the document does not include or entail financial statements and deals. In most cases, this document precedes the contract between the entities discussing an agreement.
In business, entrepreneurs interested in a joint venture agreement have to settle the conditions of their possible partnership. Before they produce contracts, they sign a memorandum of agreement to show their willingness to continue with the collaboration. According to a 2016 article from LinkedIn, the imbalance on the roles and efforts of each party was one contributor to business partnership failures. It mentioned that within the timeframe of two to three years, 50% of collaborative efforts end in vain. Although other factors arise that cause the break-off, not having a well-detailed and organized agreement will be a problem for both groups.
Well aware of the importance of agreements, various businesses or groups of individuals make use of the material for their respective arrangements with other companies and people. So, who usually uses a memorandum of agreement for non-business and business transactions?
Different types of documents are constantly compared to a memorandum of agreement. But in reality, each of these materials has specific purposes of meeting the needs of entrepreneurs, individuals, institutions, and other organizations. In 2018, National Public Radio (NPR), a non-profit organization, conducted a study to determine the contract workforce in America. The result showed that 20% of Americans were hired to only work on particular tasks or projects for a limited period of time. Without agreements or contracts, the worker will not receive the benefits they deserve. With that, having the right type of document matters. So, let’s discuss the variety of documents often likened to the memorandum of agreement.
Unlike a memorandum of agreement, this document only outlines the predetermined conditions of the people involved in the affair. Employers can provide a letter of agreement to define the work obligations and terms for the employee. Additionally, this can be for real estate agreements with other realtors or clients. As the outline of conditions, the letter of agreement can go with other documents as the supplementary material or supporting detail. Do note that a letter of agreement becomes binding when two parties sign the paper.
A membership agreement acts as a contract that summarizes the specifications, payment, and restrictions created by the business or store for the customers. Besides privacy details and benefits, patrons to the business also get rewards and limited products according to the protocol set by the management. Using this document, the business owner can avoid disputes, especially with regards to some parts or situations in the business. The typical organizations that have memberships are golf clubs, gym, and professional groups.
Sometimes synonymous with a memorandum of agreement, the partnership agreement focuses on the percentages of profits and ownership from the business venture. Anything that happens to the business affects the parties involved and not only the other—they are working together to achieve a goal. However, partnership agreements are legal and formal documents that consider many revisions before the representatives sign the deal.
Oftentimes, the memorandum of understanding is not differentiated from a memorandum of agreement. Although the documents seem similar at first glance, a memorandum of understanding only touches the surface level of a deal. This document only serves proof that the two parties are willing to continue with the arrangements. It signals the start of discussions and negotiations.
Legally binding, concise, and essential, contracts are necessary when the groups want to commit to the present agreement fully. Once the company opens its doors for the contract, adjustments and more detailed deals should be on the material. If the necessary revisions are complete, the contract becomes the only formal arrangement between the two parties.
Writing documents can be tricky if there are no guidelines to follow. In various circumstances, an incorrect section or portion printed out can lead to losses for the business or individuals. According to Investopedia, businesses fail due to faulty and incomplete plans and contracts. To avoid issues that could hurt companies or individuals, having a professional agreement form is crucial. So, here are the four ways of formulating a memorandum of agreement that works to your advantage.
Always start by providing the entire picture of the proposed agreement. Describe the work that the two parties will handle separately in their distinct fields. Besides that, the activities that both entities need to perform should be in agreement to steer clear from overlapping roles in the project or program. This part should be on the first few pages of the agreement.
Followed by the scope of work are the obligations of the parties. Doing this helps determine which areas require the concentration of the organization if it’s their field of expertise. Moreover, establishing the workload before the actual work will lessen the possible communication problems that the joint venture will experience.
Every business deal or agreement has benefits for the people involved. That means, there’s compensation for their efforts and hard work. If somebody decides to join a partnership, there should be an advantage waiting for them in return for their investment. No benefit will be a loss, and no business or individual would take risks if they do not have compensation on their end of the bargain.
In avoiding possible contract or agreement breaches, the terms and restrictions should be part of the agreement. With that, the two parties should convene to determine the conditions and penalties for violation of the deal. If one of the parties does not cooperate, they can check the agreement to see sanctions for the misdeed.
The submission of the document depends on the request of both parties. Some businesses prefer having a signed copy of the deal than a digital version, while others want a paperless trail. So, contact your partner and ask about their preference for the material.
Unfortunately, no. The delegated representatives must be the ones to sign the document. If the official is not present at the moment, you have to wait for his or her return. Having a substitute is not honored unless stated otherwise by both groups.
No. Changing anything in the document, even the language, is prohibited. If there are amendments, the two parties have to draw up another material to sign. Moreover, if changes are necessary, the party should point it out and propose revisions or introductory statements.
The renewal of the document happens when the deal comes to an end. After the end-date, the entities can decide to resume the arrangement with another agreement or move to a contract for legal purposes.
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