A memorandum of understanding sounds complex, but the idea is very simple and general. At its most basic, an MOU is a document stating an agreement between two parties to further a common goal. It could be as informal as a note scrawled on the back of a business card that states the parties will work together; it could also be as formal as a multipage document outlining a complex change to international law, which multiple national governments agree to.
In many cases, legal claims are not made on the basis of MOUs alone. However, they are recognized as legally binding documents if they contain a few specific elements: identification of the parties involved, offer and acceptance, consideration, and the intention on the part of all parties to be legally bound.
It is rare that MOUs are actually legally binding, as they are letters of the intention to create a more formal agreement, but they can be one piece of evidence in the event of a lawsuit.
When To Use an MOU:
MOUs are often confused with letters of intent, as well as contracts, but they are neither. An MOU is in many ways similar to an in-office memo, in which the writer simply needs other parties to know some information. Contracts, on the other hand, are definitely legally binding, with specific punishments in the event of a breach of contract. Sometimes, there are even punishments for violating the terms of a letter of intent. There are no such punishments if the statements made in an MOU are violated, especially if there are no other legal documents backing up the MOU.
However, like a letter of intent, an MOU can be sent as a precursor to contract or treaty negotiations. The MOU states the parties that will be involved, and what they have agreed to work out.
Elements of MOU Forms:
Although MOUs are not contracts, they are formal documents in many cases, such as pre-business agreements or pre-national or international agreements. It is important to include a certain amount of information in MOUs, including:
- Names, as well as other identification, for the parties involved
- Background of the project that led to the MOU document
- The scope of the project and why it is important
- Specific activities, if these have been pre-agreed on
- Implementation of these activities
- Funding issues
- Roles and responsibilities of the parties involved, especially if specific activities are part of the MOU
- Timeline and duration of the agreement
- Signatures of all parties involved
Why Should I Use an MOU Template?
Because MOUs are formal documents in many cases, it is important to keep track of what information should be declared, and in what part of the document. Using an MOU template can help you keep track of all the necessary information in a professional format. Download our free MOU templates to see which one will work best for you, and what information you must gather to include in the document. Check out our free, downloadable MOU templates today!