Agreement Is Not Binding
When considering this issue, it is important to keep in mind that the law evaluates education issues on the basis of what a third objective bystander would think. If such a person believes that the parties have reached an agreement, there will be a contract, even if the actual parties prove critical on the outstanding issue. Since a contractual condition usually has a strong legal effect, the prerequisite is that any agreement is “subject to authorization” (e.g. B by the shareholder or by the representative of the board of directors or board of directors of a parent company) and “contractually”, effective means to justify the non-binding nature of a declaration of intent. Other conditions generally included in a non-binding Memorandum of Understanding are the reasonably satisfactory outcome of due diligence studies and the involvement of a works council. The terms of a MoU may relate to two or even three different objects, one being the Memorandum of Understanding itself and the other the expected final agreement (and its conclusion). Accordingly, the Memorandum of Understanding may indicate that a transaction is subject to a duty of care, is subject to a contract and is subject to financing; The Memorandum of Understanding may also stipulate that the binding agreement (or the execution of the commitments contained in the final agreement) is subject to administrative authorisations and payment of the purchase price. The difference between binding and non-binding contracts is important so that you can be informed at best when signing your next legal document.