A memorandum of understanding (MOU) in a joint venture situation. This represents the good faith intentions of the parties to proceed but is not legally binding. This document is drafted in Neutral Form.
The parties believe that the joint venture will be in their mutual best interests. They recognise that the various arrangements will need careful review but each will endeavour in good faith to agree the detailed terms of the joint venture, on the basis of the principles set out in this Memorandum, and to take all necessary other actions in order successfully to establish the joint venture. The parties' preferred intention is to create a new jointly-owned company into which they would transfer their existing interests. The parties will consider appropriate alternative structures if that becomes necessary or desirable because of tax and cost efficiency. The parties' preferred intention is to create a new jointly-owned company. The parties will consider appropriate alternative structures if that becomes necessary or desirable because of tax and cost efficiency.
The parties shall draw up and approve an initial business plan. The board of the joint venture company (the Board) will review the business plan at regular intervals and update it annually. Pending completion of the joint venture, each party shall ensure that its business and interests to be vested in the joint venture are carried on in the ordinary and usual course. Neither party (nor any member of their respective groups) can enter into any new venture or material transaction likely to have a material effect on the joint venture without the parties consulting each other beforehand.
Valuation negotiations will be finalised by the parties before signing the joint venture agreements. The Parties will use all reasonable efforts to agree an appropriate valuation process and methodology. The intention is that the parties should jointly appoint an independent valuer to undertake the valuation exercise. The independent valuer would supervise, if necessary, appropriate specialist valuers in particular areas. The independent valuer must have regard to valuation principles agreed by the parties and to submissions and materials which they provide.
memorandum of understanding,
heads of agreement,
heads of terms,
Letter of Intent,