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Memorandum of Understanding for Collection of Money from Defaulters.

Format of MoU for Collection of money from defaulters by collection agency.

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.



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.


__________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.


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.

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.

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.


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.

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.

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.

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.


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.

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.

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.

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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