When two parties come to a mutual understanding, they often enter into an agreement. These agreements can come in many forms, including contracts, memorandums of understanding, and letters of intent. But what is an agreement between called? The answer isn`t always straightforward.
Legally Binding Agreements
The most common type of agreement is a legally binding contract. Contracts typically define the terms of a business deal, including obligations, deadlines, and payment terms. They can be written or verbal, although written contracts are easier to enforce in court. A contract can be called a number of things, including an agreement, a compact, a pledge, or a covenant.
Non-Legal Agreements
Not all agreements are legally binding. For example, if you and your friend agree to meet for lunch next week, that`s an agreement, but it`s not one that has legal implications. Other types of non-legal agreements might be used in a professional setting, such as a memorandum of understanding (MOU). An MOU is a document that outlines the broad terms of a partnership or collaboration, without getting into the nitty-gritty details of a legal contract.
Letters of Intent
Another type of non-legal agreement is the letter of intent (LOI). An LOI is often used in a business setting to outline the key terms of a deal before a contract is drawn up. It`s a way for both parties to agree on the basic framework of the agreement and ensure that they`re on the same page. Letters of intent can be binding or non-binding, depending on the language used in the document.
Whatever the specific type of agreement, it`s essential that both parties understand what they`re agreeing to. This is why contracts and other agreements typically include a section outlining the terms of the agreement in plain English. It`s also important to have a legal expert review any agreements before they`re signed to ensure that they`re airtight and legally binding.
In summary, an agreement can come in many forms and be called many different things. The most common type of agreement is a legally binding contract, but non-legal agreements like MOUs and LOIs can also be useful in certain situations. Whatever the type of agreement, it`s essential that both parties understand its terms and have a way to enforce them if necessary.