Read more about what you is important before, during and after the MOU signing. An MOU is generally a nonbinding agreement unless all parties sign it and some sort of consideration - such as a fee - is exchanged. When either party discovers the real intent of the prospected partner differs from the original expected intent, the whole potential partnership might fail. Lack of strategic direction in the MOU, or unclear parts of the MOU might be cause for future disappointments. Therefore, it is important to make sure an MOU fully covers the desired strategic direction a company has for the future. Since a MOU in China has a more binding character, Chinese business people view the MOU already as a real contract and thus have no interest in renegotiating the deal in a second contract.īesides such legal basis creating importance to a MOU in China, it is also the starting point of a future collaboration. Their reasoning is that the MOU is just a prelude to the real contract. Therefore, a common mistake is that companies originating from a common law country will not fight too hard on the details of the MOU. This is different from any common law MOU. For example, when the foreign party is acting in bad faith, the MOU can be enforced under the Chinese legal system. However, when an MOU is signed under Chinese civil law, the importance of the document becomes much higher. Only the real contract will have meaning. This perspective originates from the fact that common law countries do not consider the MOU as a valid contract. The importance of an MOU in Chinaīusinesspeople from common law countries like the United States, tend to consider MOU signing as an unimportant but necessary first hurdle. An MOU can be between two or more parties. This international legal document is globally used to signal the willingness of parties to move forward. But what is an MOU? What is the importance of an MOU in China?Ī memorandum of Understanding (MOU) is a legal document indicating the intended start of collaboration of two parties. At 1421, we are very proud of Prime Vision’s accomplishment, and we trust in their future in China. “This is the start of close cooperation to extend the presence of Prime Vision in the Chinese market”. Mid-September our client Prime Vision signed a Memorandum of Understanding with Guangdong Tengen Industrial Group Co., Ltd the Dutch Embassy in Beijing hosted the ceremony.
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