- What Is a Memorandum of Understanding?
- How Does a Memorandum of Understanding Work?
- What to Include in a Memorandum of Understanding
- Memorandum of Understanding Sample
- Is an MOU Legally Binding?
- Memorandum of Understanding vs. Memorandum of Agreement
- Create Your MOU With Legal Templates
- Frequently Asked Questions
What Is a Memorandum of Understanding?
A memorandum of understanding is a written agreement that shows two or more parties intend to work together. It outlines shared goals and responsibilities, helping clarify the terms of a future collaboration—without creating a binding legal contract.
An MOU can outline business partnerships, joint ventures, research projects, and non-financial agreements where trust and communication are essential. It’s a practical first step before formalizing a contract.
Use an MOU to:
- Collaborate on shared projects
- Clarify roles and responsibilities
- Explore potential partnerships without legal commitments
- Define terms for a trial run
- Document mutual intent before contract negotiation
Don’t use an MOU for:
- Financial transactions or high-stakes deals
- Legal obligations or regulatory issues
- Long-term commitments with complex terms
- Situations where enforceability is a concern
How Does a Memorandum of Understanding Work?
An MOU helps both parties stay aligned by clearly defining the purpose, expectations, and limits of their relationship. Here’s how the process usually works:
- Identify a shared goal: Both parties agree that collaboration would be mutually beneficial.
- Discuss expectations: You talk through what each party will bring to the table.
- Draft the MOU: You outline the agreement using a simple, clear format.
- Review and revise: Both parties make edits and confirm the terms.
- Sign the document: You sign the MOU to show mutual understanding.
- Collaborate and communicate: You use the MOU as a roadmap while working together.
- End or update the agreement: You either complete the project or modify the MOU if goals change.
What to Include in a Memorandum of Understanding
A complete MOU should include the following elements:
- Party information: The names, addresses, and roles of the individuals or organizations involved
- Purpose and goals: An explanation of why the agreement exists and what the parties aim to achieve
- Scope of work: A general description of the project or relationship
- Responsibilities: A detailed outline of what each party agrees to do
- Resources: Information on the time, tools, staff, or funding that each party will contribute
- Confidentiality: (Optional) Provisions for protecting sensitive information
- Governing law: The state or jurisdiction that will govern the agreement
- Termination: The conditions under which and the procedure by which the agreement can end
- Signatures: Each party must sign to indicate their mutual understanding of the agreement
Memorandum of Understanding Sample
View a sample of a memorandum of understanding below. Once you’re familiar with the MOU format, you can customize our template using our document builder and then download it in PDF or Word format.
Is an MOU Legally Binding?
No, a memorandum of understanding is not legally binding. It simply outlines the parties’ intentions for a project, negotiation, or partnership agreement. However, it should include enough details to clarify expectations as the parties continue to interact.
While the MOU itself remains non-binding, parties can add legally binding clauses. For example, they may add non-disclosure agreements to address specific concerns. Unless explicitly stated, an MOU does not require parties to fulfill its terms.
Memorandum of Understanding vs. Memorandum of Agreement
While both documents formalize working relationships, an MOU is generally less formal and non-binding. A memorandum of agreement (MOA) usually contains more detail and may be legally binding.
| MOU | MOA |
|---|---|
| Not legally binding | Often legally binding |
| Broad, general terms | Specific, detailed terms |
| Early-stage collaborations | Formal agreements |
| No exchange of money | May involve funding or assets |
Choose an MOU if you’re in the early stages of a partnership and want to align on goals without legal commitments. If you’re ready to move forward with a more formal, enforceable agreement—especially one involving money or resources—an MOA may be the better fit.
Create Your MOU With Legal Templates
Drafting an MOU can feel overwhelming—especially if you’re unsure where to start. Legal Templates helps simplify the process with a guided template that includes all the essential sections and non-binding language.
Just enter your details, and we’ll format your document for you. It’s a practical way to save time, reduce confusion, and feel confident about what you’re sharing with the other party.
Frequently Asked Questions
How long does a memorandum of understanding last?
An MOU is usually indefinite if the parties don’t specify an end date. However, these agreements usually exist for short-term projects. Parties can establish an end date ranging from a few weeks to several months.
What happens if you break an MOU?
Breaking an MOU won’t result in legal consequences if it’s explicitly non-binding. But failing to honor the terms can damage trust, which may affect future business collaborations. Consider the impact on goodwill even if there are no legal obligations.
What is the purpose of an MOU?
To outline a mutual understanding between parties before committing to a formal agreement, helping clarify goals, roles, and expectations early in the process.
