This type of open collaborative process makes life easier for everyone and increases the chances that the conditions of the contract or agreement will be met.ĭefine a relationship between organizations that agree to do something together or provide something other than goods or services. The Box Tool assumes that most small organizations, whether designing contracts or agreements, have already discussed the terms with the contractor or signatory and that there will be no surprises for anyone in the final document. Keep in mind, however, that a contract is only applicable if it is a clearly defined exchange. In general, if the success of an effort is based on this type of cooperation and each party properly fulfills its responsibilities, a contract is probably correct. If this is not the case, the parties usually discuss the memorandum already drafted and elaborate any differences before it is signed. Most memoranda are nothing more than attempts to make clear in writing what the parties have already developed and agreed in meetings. The elaboration of a memorandum of understanding is therefore similar to the elaboration of a contract, except that the terms of the agreement have probably been discussed beforehand by all parties. In the United States, details may vary slightly depending on whether the contract is for goods (under the Uniform Commercial Code) or services (which fall under the customary law of the state). The necessary elements are: offer and acceptance, consideration and intention to be legally bound (animus contrahendi). Note: This document is required to be published and presented to the shareholders, creditors and others associated with the company so that everybody knows the lines on which a company shall operate.Whether a document constitutes a binding contract depends solely on the presence or absence of clearly defined legal elements in the actual text of the document (the “four corners”). For a public limited company minimum, seven members are required to sign the memorandum, whereas in a case of a private limited company minimum two members are required to do the same.
Also, the company is required to state the list of its assets over here. Capital Clause: Company’s authorized capital along with the nominal value of all kinds of shares need to be disclosed here.Liability Clause: This clause requires to mention the extent to which the shareholders are liable to pay off the debt obligations in the event of the dissolution of the company.the purpose for which the company is being established. Objective Clause: The objective clause requires to mention clearly the objective behind the incorporation of the company, i.e.Registered Office Clause: This clause requires to mention the registered office address of the company.Also, it must be ensured that the name selected for the company should not resemble with the name of any existing company. Name Clause: The name of the company that must end with the term “limited”.Thus, this is considered as a supreme document and comprises of following important clauses: Once the document is prepared the company cannot perform anything beyond the limit as mentioned in the memorandum of association. It is mandatory for every company that wants to get registered as a private/public limited to prepare the memorandum of association.
Memorandum of Association serves as the constitution of the company that defines all the rules and regulations that must be complied by every company. It is the document that governs the relationship between the company and the outside. The memorandum of association is the most important document that needs to be formulated with utmost care.
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