Collection of money from defaulters is a difficult task for Companies or banks. Most of the time, this job is being outsourced to expert agencies to collect money from defaulters on commission basis or on any other terms. Collection agencies have specialized experience in this field and their services are normally more effective than those who are not experienced in this field.
Sample Format of Memorandum of Understanding for collection of money from defaulters is given below.
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (MoU) records the understanding arrived
between ___________ Private Limited having its Registered office at ___________
___________ ___________ (hereafter referred to as "Company"), a Company
Registered under Indian Companies Act, 1956 represented by its Director,
_____________ _____________ which expression shall unless repugnant to the
context or meaning thereof include its successors, and permitted assignees of
the FIRST PART.
AND
__________Associates, a Collection firm having its office at ___________
___________ ___________ (hereafter referred to as "Agent") through its Partner
___________ ___________, which expression shall unless repugnant to the context
or meaning thereof include its successors, and permitted assignees of the SECOND
PART.
OBJECTIVE
To work jointly to collect outstanding amount from the Debtors of Company and
to use necessary collection resources to achieve the objects of the MoU. This
agreement lays down the terms and conditions of collection of outstanding amount
from the Debtors and responsibility of both the parties in its effective
utilisation of available resources.
OBLIGATION OF Company
1. Company will provide to Agent complete list of Debtors whose amount are
outstanding along with Details of authorised persons, contact details, bills,
vouchers and all other supporting documents.
2. Company will provide further support required if any for locating or
identifying the Debtors.
3. Company will have the obligation of accuracy of data being provided.
OBLIGATION OF AGENT
1. Agent will send notices to the defaulters by Registered AD. Copy of the
notices alongwith the acknowledgement will be kept in separate files for office
records.
2. Agent will produce on demand complete details of notices sent.
3. Agent will follow up with the Debtors and officers for collection of amount
purely in the method allowed under the law of land.
4. Agent will not adopt any unfair means for collection of the amount. Any
inconvenience caused due to the adoption of any unfair means will be answerable
by Agent and it will be the sole responsibility of Agent to sort out the matter.
Company will not be responsible for any damage caused or any inconvenience
caused due to the means adopted by Agent for collection of amount.
5. Agent shall keep Company indemnified against any claim made by any third
party due to any act of Agent, whether the same is justified or not and whether
Agent was acting within law for discharge of its duties under the present MOU.
6. Agent will not accept any cash payment from parties and will collect cheques/Demand
drafts on behalf of Company from students in the name of Company and will send
report along with cheque/demand draft collected to Company on weekly basis.
7. Agent will do follow-ups, negotiations and other related works. Negotiations
if any will be finalized as per the agreed terms with Company. Any special
decision should be made with the approval from Company.
SCHEME FOR COLLECTION
1. One Time Settlement of Outstanding
Company agreed to receive the outstanding amount without interest in case of one
time settlement.
2. Two Installments over 6 months
Company Agreed to grant waiver of interest to Debtors who wish to pay the
outstanding amount within 6 months in 2 installments.
3. Any other terms as agreed by Company time to time
Company will inform Agent in writing any other scheme for fee collection or
modifications if any to the existing scheme.
PAYMENT TERMS
Company will pay to Agent the following amounts against its services:
Charges for issue of notices through Registered Post to the parties Rs. ___ per
notice will be given by Company.
Commission against collection Company will pay __% commission against collected
amount including post dated cheques. But commission against cheque returned if
any will be adjusted against next bill.
Period of payment Payment against collected amount will be released within 15
days of receipt of bill.
Taxes Agent will be responsible to pay taxes if any payable against the amount.
VALIDITY & RENEWAL
Duration of this MoU will initially be One Year starting from date of signing
the MoU and can be further extended for another term of One year on mutually
agreed terms and conditions.
TERMINATION
1. Either party may terminate by providing the other party with three calendar
months advance notice. Such termination shall take effect at the end of the
three-month period.
2. However, either party shall be entitled to terminate this MoU immediately and
without further notice in the event of the other party committing a material
breach of the terms and conditions of this MoU, and failing to remedy such
breach within 60 (Sixty) days after receipt of written notice calling upon such
party to remedy the breach complained of.
3. The termination of this MoU, for whatever reason, will not affect the rights
of a party, which might have accrued at the date of termination and will further
not affect any rights, which specifically or by their nature survive the
termination of this MoU.
4. However, in case of termination of this MoU for any reason, the
responsibility of each party shall continue up to completion of running
collection work.
5. Upon termination of this MoU Agent shall forthwith stop representing Company
for any future collection, use of its Trade mark, or any other Intellectual
property or taking any money, in cash or otherwise, from any of the students.
MATTERS NOT PROVIDED IN
If any doubt arises as to the interpretation of the provisions of this MoU or as
to matters not provided therein, parties to this MoU shall consult with each
other for each instance and resolve such doubts in good faith.
WAIVER
Any law restraining the validity and enforceability of any provision of this MoU
shall not affect the validity or enforceability of the remaining provisions
hereof and this MoU shall be deemed as not containing the invalid provisions.
The remaining provisions of this MoU shall remain in full force and effect,
unless the invalid or unenforceable provision comprises an integral part of or
otherwise is inseparable from the remaining MoU. In such a case, the parties to
this MOU shall attempt to agree on a provision, which is valid and enforceable
and similar to the original provision.
ARBITRATION AND JURISDICTION
In case of any disputes arising between the parties (Company and Agent) in
respect of implementation of work undertaken and rendered by the Agent or the
payments agreed to be made by the Company or in respect of any other term in
this MoU, the parties undertake to settle the same by mutual negotiation and in
case no such settlement is arrived at after mutual negotiations, an arbitrator
shall be appointed for resolving any or all the disputes that may arise between
the parties as per the law applicable. The sole arbitrator shall be appointed by
Company and Agent jointly whose decision in this regard shall be final and
binding between the parties.
MoU EFFECTIVE DATE
This Memorandum of Understanding shall be effective from the date of signing by
both the parties.
Signed this day the _____ of May Two Thousand Ten.
For Company ___________ Limited
For ___________ Associates
Sign : ___________ Sign : ___________
Name : Mr. ___________
Name : ___________
Designation : Director
Designation :Partner
Witness (1)
Witness (2)
Sign : ___________
Sign : ___________
Name : ___________
Name : ___________
Designation :___________
Designation :___________
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