What is a Memorandum of Understanding?
A memorandum of understanding (MOU or MoU) is a document between two or more parties that broadly defines the expectations, roles, conditions, and warranties within a mutual project. Usually, it is not legally enforceable, but the parties—if desired—may use an MOU as a binding document in certain cases.
If you want to prepare your memorandum, you can use our step-by-step document builder.
When to Use a Memorandum of Understanding
A memorandum of understanding is one of the most popular agreements. Since it does not usually belong to binding contracts, it takes less time to prepare. Therefore, individuals avoid all the red tape connected with a contract long-term preparation.
However, an MOU is a strong declaration of a further relationship between partners. The most common occasions for using the MOU agreement are the following.
By governments
Governments often use MOUs to establish different types of cooperation between countries. They help clearly define the intentions and opportunities of the parties in the strategic fields of activity. For example, the United States has many memoranda on science and technology cooperation with different governments.
By businesses
MOUs can be a useful part of business relationships. The agreement is a good way to promote the company in a specific field, improve its competitiveness, and support economic development. An MOU helps to define all implementation details and state the conditions of anticipated transactions between business partners.
By universities
An MOU is a common practice for universities. It serves as a statement of interest to explore different opportunities for cooperation, including scholar and student exchanges and resource sharing within international projects or grant programs. It also helps universities enter into agreements with private organizations and companies for further internships or scientific cooperation.
How to Write a Memorandum of Understanding
Writing a comprehensive memorandum of understanding can require a lot of effort. You are encouraged to use our builder to make this process more bearable. Along with our guidelines, we can help you prepare the documents in no time. Please, follow the next steps while preparing your agreement. If you have questions during the process, it is better to address your attorney.
Step 1. Identify the parties
At the beginning of the document, all parties involved in the agreement should be identified. Make sure that either party indicates the right name and address. It is never redundant to make a small introduction and provide background information on each party, mutual promises, or history of the collaborative relationship.
Step 2. Describe the overall purpose
The next important thing is to describe the subject matter and objectives of the memorandum. The memo of understanding is always devoted to a specific mission. Depending on the occasion, it can be aimed at broadening the countries’ scientific communities, promoting the competitiveness of the company and business, or establishing student exchange programs.
Step 3. Define the roles and responsibilities
This section might be the most extensive. Each partner is expected to prepare a sample of the terms in advance and then negotiate them with another party(-ies). You can consult your lawyer on the issue. When you have finished the negotiation stage, you have to describe the partner’s roles and state both individual and shared obligations. It is possible to add relevant services or resources the parties can benefit from in connection to the project. The parties should also name the team representatives from each side, plan the project’s implementation and performance evaluation.
Step 4. Indicate the scope and timeline
It is crucial to identify the effective date and duration of the agreement. If it’s a long-term cooperation, you can indicate the date, after which the memo will be automatically extended. You may include the termination terms, specifying its conditions and how one party shall notify the other, and within what period of time.
Step 5. Add disclaimers
Do not forget to include disclaimers about the memorandum’s financial aspects and general compliance with the state law. Also, if you do not refer to the memo as a binding document, try to make it clear. Otherwise, in case of any breach of the agreement, the court may treat it like a legal contract.
Step 6. Provide other necessary terms
You should look through the memorandum once again and include, where it’s necessary, all the information pertinent to the project. You can add the term about governing law or notice requirements. It’s useful to include information in connection with arbitration and dispute resolution, clarifying how disputes or claims should be settled.
Step 7. Sign the memorandum
Do not forget to leave the space for all the authorized parties to sign the agreement. Signing the memorandum is important because it demonstrates the commitment of all partners to work together to support and achieve the project’s goals.
Frequently Asked Questions
Is a Memorandum of Understanding Legally Binding?
Usually, it’s not legally binding. The reason partners sign such an agreement is to prepare themselves for further cooperation and provide all the details related to a future contract. However, if the agreement does not clearly state that it does not constitute a contract, the court may treat it as an enforceable document should some claims in connection to the agreement arise.