In the recent case of Ashapura Mine-Chem Ltd v. Gujarat Mineral Development Corporation, the Indian Supreme Court considered the separation and survival of a compromise clause contained in a Memorandum of Understanding (Memorandum of Understanding). The Supreme Court found that the arbitration agreement was valid in the protocol because it is a stand-alone agreement independent of its underlying contract. The Supreme Court relied on several cases, including Reva Electric Car Co. Pvt Ltd. v. Green Mobil 2002 (2) SCC 93 and Today Homes and Infrastructure Pvt. Ltd. v. Ludhiana Improvement Trust 2014 (5) CSC 68 and Enercon/Enercon 2014 (5) CSC 1 concluded that the dispute between the parties, in addition to the fundamental nature of the presumption of dissociation, related to the relationship established by the MoU and would therefore bind the arbitration agreement it contained. Parties. The applicability of a statement of intent therefore depends on the intent of the parties. If the parties do not want to make their agreement legally binding, the courts will not apply the document.
However, if the parties intend to make the agreement legally binding, the courts may decide that the parties have in fact entered into a contract. In each company, communication between the parties must be reduced to documentation. The agreement is preceded by formal agreements and their development is a challenge, especially for large-scale transactions. A simple definition of the memorandum involves an informal written recording of an agreement that has not yet become official. MoU can be called the Gentleman`s Agreement simplicitor or a step before the formal agreement in an agreement regulating a future relationship. Legal jargon must also be well understood for signatories, as this can also form the basis for future litigation. Whether or not a document constitutes a binding contract depends on the following essential elements for a contract: offer, acceptance, consideration and intention to be legally bound. In international relations, the MoU enters into a broad category of contracts. It is important to look at every word of the document, as there are many documents that are not legally binding, although they are written by counsel and signed by witnesses. While it is legally possible to distinguish between the two types of documents mentioned above, there can be no legal or practical difference if they are written in a similar language.