Drafting a Memorandum of Understanding

Drafting_for_Business_Deepa_Mookerjee.jpgLet’s say you are the CEO of ABC Limited, a multinational company. You have had oral discussions with the CEO of Apples Pte, a non-resident company that, in a highly lucrative deal, wants to invest in your company. While you do not want binding documents to be signed at this stage, you would like some kind of documentary proof that this deal is being negotiated. What would you do?

Ideally, both parties would sign a Memorandum of Understanding (“MoU”). In all commercial transactions, initial discussions between parties are usually followed by the execution of a document that lays out the preliminary intention of the parties to enter into a deal. This document is termed a MoU, a term sheet, or a letter of intent — terms are often used interchangeably in commercial transactions.

At first glance, a MoU looks like a simple document. Drafting the MoU however, is one of the most important steps in the transaction. This is because it serves as the basis for more detailed legal documents. It thus lays the groundwork for a transaction and ensures that the parties agree on all major issues, thereby reducing the possibility of a misunderstanding.

Signing_an_MoUWhile drafting a MoU, always ensure that you specify the correct name and description of the parties. If this is not done, it is a clear loophole that may allow either party to wriggle out of the deal, as the MoU does not place any obligations on them. Similarly, include a clear description of the deal. Never use vague or unclear language as it creates confusion.

Let’s understand some other key points to keep in mind while drafting a MoU.

Binding or non-binding?

A MoU can be drafted to be either legally binding on the parties to the MoU or serve as a document that is not binding and only captures the intent of the parties. A legally binding MoU is useful when parties have already agreed on major aspects of the deal and do not want this understanding to change under any circumstances. It also ensures that the parties do not back out of a deal without facing any consequences.

Assume that Apples Pte. has agreed on the amount of consideration, the nature of indemnification, and all the representations and warranties to be provided under the deal. All of these are key points that make or break a deal, and so you may want to enter into a binding MoU to ensure that Apples Pte. is tied to the deal. On the other hand, if the negotiations are still at a very preliminary stage, you could consider a non-binding MoU. It gives you the comfort of some documentary proof of the discussions, without restraining you from backing out of the deal at a later stage.

Often parties opt for a non-binding MoU as they wait to complete a due diligence exercise. This is a detailed investigation of a company and its results typically affect the terms of the deal materially. Parties therefore, do not want to enter into any binding documentation before the investigations are complete.

Exclusive or non-exclusive MoU

Non-ExclusiveMoU_MemorandumofUnderstanding.jpgA MoU can be exclusive or non-exclusive. For an exclusive MoU, parties are restrained from entering into similar MoUs with any other entity during the term of that MoU. On the other hand, the document can be drafted on a non-exclusive basis, in which case, the parties are free to enter into discussions with other entities dealing with the same subject.

If you are apprehensive that your competitors may also approach Apples Pte, start negotiations with them, and thus harm your deal, you can enter into a MoU on an exclusive basis. This would mean that during the term of the MoU, Apples Pte is barred from negotiating with any other party.


During negotiations of this nature, to understand the nature of each other’s businesses and the general condition of the company, parties exchange a lot of information, much of which is proprietary in nature. Obviously, no party will invest without having complete information about the investee company. In order to ensure that this information is not leaked to your competitors or the public in general, one very important clause that must be included in every MoU is a comprehensive confidentiality clause. Always insist on a clause that states that all information exchanged between the parties is to be treated as confidential and must never be disclosed to the public.

These are just few of the important clauses that you will see in every MoU. Remember always, that there is no set format for a MoU. It could be a one-page document or it could run into several pages. Ultimately, at the end of the day, the nature, contents, and form of the MoU will depend upon the nature of the deal and what your clients want.

(Deepa Mookerjee is part of the faculty on

Human Rights

How digital activists got the European Parliament to vote their way on net neutrality

joemcnameeRecently, the European Parliament voted to stop internet service providers from charging for preferential access to their networks, something known as a “net-neutrality” law. The legislative proposal is also notable because of the five-year long campaign that preceded it. We spoke with Joe McNamee, the Executive Director of European Digital Rights, a Brussels-based advocacy group, about this campaign. He said that main reason behind the success of the campaign was the co-ordination between professional Brussels-based activists and the people around Europe who were mobilised and empowered to speak to their parliamentarians.

“It is very difficult be successful as a civil society organisation if you rely exclusively on professional activism in the capital because you need the weight of the populace behind you and  you will never get anywhere if you just rely on public outcries because the compromises that are made between politicians will not necessarily reflect the key nuances of what you’re trying to deliver. You really need to have both professional activists and a wider campaign across society.”

IPHe added that digital activists needed to develop a more sophisticated response to the public relations machinery of the telecom companies. “There is a need to engage the press in a far more efficient way because the big lobbies have their press lobbies already in place. There is a risk that if a misleading version of events is going through the press, that you’re not going to have as much of a public outcry.”


A new citation system for uniquely Indian legal material

Since it launched last week, more than 700 Indian law students and others across India have registered to receive a a working draft of SRohitPothukuchi_StandardIndianLegalCitationtandard Indian Legal Citation, a new citation system specifically covering Indian legal sources and material. Rohit Pothukuchi, a graduate of the NALSAR University of Law, is its founding editor.

Speaking with us, Mr. Pothukuchi highlighted the fact that citation systems that are currently used in Indian law schools and by researchers, such as The Bluebook, are expensive and have not been made available in all law schools. This uniform citation standard, on the other hand, is free and, Mr. Pothukuchi said, will always be free. The Standard Indian Legal Citation will also reduce the need to search far for how to cite a lot of uniquely Indian legal sources — such as legislative material, Bills, the Constitution of India, reports by ministries, and Parliamentary debates — that are not covered by the commonly used citation standards. Mr. Pothukuchi is looking forward to a receiving inputs on the working draft from all parts of the legal community, including law schools and law students.


Lessons in oral communication from Martin Luther King

DeekshaSinghTomorrow (January 15) marks the eighty-fifth birthday of Martin Luther King, Jr., a civil rights activist of tremendous influence and instantly recognisable as one of the great orators in history. His speech, “I Have a Dream”, served to underline both these attributes.

Modern lawyers find it necessary to make effective oral communication — not only during litigation or arbitration proceedings, or during negotiations, but also while interacting with clients and colleagues, in interviews and meetings, and while making presentations. Studying the techniques of great orators like Martin Luther King can give us an insight into this essential skill.

Before you speak

All texts on public speaking will recommend preparation as ‘essential to success’. That does not always mean that you should write a speech or a presentation. You should however, reflect on some of the following before speaking.

– What is your purpose or your task?

– Who is your audience? What do they want? What style of communication could work for them?

– Do you have sufficient knowledge?

– What is your theme or your themes?

– How much time will you have to speak?

Thinking about these points will focus your thoughts on what you are about to say in the context of your purpose and your audience.

As you can see from the video above, Martin Luther King had prepared notes for “I have a dream”. That allowed him to follow the structure he had prepared.

The structure

An important step in developing into a good speaker is about knowing what to say, and in what order. Even the most informal speech or remark can benefit from a structure of some kind.

First, consider how to open. The aim of your opening, wherever you are speaking, is to get the attention of your audience and to introduce the matter you are speaking about or the issue that is up for discussion.

Second, move through the points you wish to make in a logical manner. For example, you can move through your points from the most persuasive to the least persuasive.

Legal-Writing-and-Professional-CommunicationsA reading of “I have a dream” can help us appreciate how that speech was structured. King first appeals to the founding principles of America—freedom and justice to all people, then brings to the fore the failure of those principles where race was concerned, and finally — leaving disappointment behind—talks about his hope, and prays for the future.

Conclusion and repetition

That brings us to the conclusion. You should always conclude. Don’t just finish making your various points and then stop speaking. It is often the first and the last things that you say that people will remember most, so don’t waste the opportunity to make your point one last time. Your conclusion should also link to the theme or the argument that you introduced when you started speaking.

One obvious difference between written and spoken communication is that a reader can go back and look again at something they missed or did not understand. A listener cannot do that. Repetition, therefore, can give you an edge in oral communication.

The power of a planned speech and repetition as a rhetoric device is evident in any of Martin Luther King’s speeches. Even now, fifty years after he made the speech, the words ‘I have a dream’ invoke his vision for racial equality.

(Deeksha Singh is part of the faculty on


But I don’t want to dumb down my writing!

PlainEnglishwithTDOne of the most enduring objections to the use of plain English is that it would ‘dumb down’ writing, or at the very least, make it incredibly boring. This objection is understandable when you consider the ways in which we usually use the word ‘plain’. If food tastes ‘plain’, or your outfit is described as ‘plain’, well, that’s usually not a compliment. When it comes to writing, however, the use of plain language can be a very good thing indeed.

To illustrate, let me take you on a scattered journey, through some of my favourite examples of excellent plain English writing, both in the legal world and outside.

For me, one of the joys of living in India has been discovering the vast range of Indian authors writing in English. They have given me insights into the country, its people, and its history, that I would never have otherwise had. In that vein, how can one go past A Suitable Boy? That sweeping epic somehow managed to examine the minutiae of a ghazal performance and the tragedy of communal riots with the same deft hand, and with language as simple and powerful as this: VikramSeth_ASuitableBoy_extract

Another obvious example of great Indian writing comes from the nation’s most famous lawyer, Gandhi ji himself. His speeches and writings show, again and again, how deceptively simple statements can wield great power. Eye_for_an_eye_MKGandhiIf we keep travelling down the path of great leaders, we can turn to examples such as Martin Luther King Jr., whose famous “I Have a Dream” speech is rightly renowned as a masterpiece of rhetoric.Martin_Luther_King_I_have_a_dream

Activism and calls for change are, of course, fertile ground for stirring rhetoric. But what of the slightly more ordinary, more everyday? Again, examples are all around, and often only as far away as a newspaper column or magazine article. Renowned academic Upendra Baxi, for example, has not only published countless books and articles, but has written columns in the Indian Express.

And if we delve into different jurisdictions around the world, we can see that the plain language movement is being embraced in many places. In California, the Judicial Council has adopted award-winning, plain language jury instructions. When a judge is talking to a jury about the reliability of witnesses, instead of saying “Failure of recollection is common. Innocent misrecollection is not uncommon.” – a statement that actually involves a triple negative – he or she should say, “People often forget things or make mistakes in what they remember.” So simple, it’s almost a Homer Simpson “d’oh” moment, right?

Believe it or not, there are also many judges who prepare judgments of elegance and simplicity. Famous examples include Lord Denning, of the House of Lords, and Justice Scalia, of the Supreme Court of the United States. Whilst poles apart in philosophy and approach to the law, many of their judgments display a unique gift for prose—whether you agree with their decisions or not.

Justice Scalia’s style is eminently readable, and demonstrates his decision-making process lucidly. We can see this in his reply to Justice Stevens in the case of Baze v. Rees, a 2008 case about the constitutionality of the death penalty in the U.S.A.


Lord Denning often starts his judgments by setting the scene, and continues in that vein throughout—an example of how storytelling can be such a powerful tool for a writer. LordDenning_Miller_v_Jackson_villagecricket

And with that rather lovely vision of a village cricket ground in the evening light, I’ll stop these wanderings. Safe to say that these examples are merely drops in the ocean of all the great writing and oratory that has been done in plain language. I hope you are now even more inspired to keep reading and writing!

(Tennille Duffy is part of the faculty at