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Memorandum Of Understanding(MOU)

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About Memorandum Of Understanding(MOU)

A Memorandum of Understanding (MOU) is a non binding agreement between two or more parties outlining the terms and details of an understanding, including each parties' requirements and responsibilities. An MOU is often the first stage in the formation of a formal contract.

Memorandum of Understanding (MOU) is an agreement between two or more parties outlining the rights and obligations of the parties to the agreement. It is generally made when parties are into initial discussions.

So, the major features of the oral discussions between the parties are laid down in the form of a Memorandum of Understanding, which includes:

A simple document that formalizes the first level of discussions between the parties.

The common understandings between the parties, and

It serves as a basis for making a formal contract later on.


Identify the parties

It should specify the name of the parties between whom memorandum of understanding is being signed.


It should clearly specify the purpose and the goals for which the memorandum is being signed.


The memorandum should specify the duration of such an agreement between the parties i.e, the beginning and the ending dates of the memorandum. Also, it should provide for the circumstances in which such memorandum will be terminated.

Meeting and Reporting:

It should specify the plan for the meetings between the parties. For instance, parties can decide to meet at least once in a quarter.

Financial Considerations

The memorandum should specify the amount of capital contribution to be made by the parties. It should also mention the person authorized to make the major financial decisions. The financial record keeping of the assignment/program being undertaken should also be maintained.


The memorandum may provide for the appointment of the persons to take care of the day to day operations of the program. The role, responsibilities, and remuneration should also be mentioned.

Signed with dates

Once the MOU is prepared and agreed upon by parties involved, it should be signed and dated by the authorized individuals representing each party or organization.

Document Required

A MOA helps you and your partner think through how a future agreement may work before the actual legally binding agreement is signed. A Memorandum of Understanding defines a business project you are planning to undertake with another partner or partners. Usually, the project is short-term and has a forecasted end date. The MOA defines who the parties are and what their expected contributions will be. It also defines the project and the purpose of the project.

What Should Be Included in Memorandum of understanding(MOU)

Frequently Asked Questions

A Memorandum of Understanding (MOU) is a formal agreement between two or more parties. Companies and organizations can use MOUs to establish official partnerships. MOUs are not legally binding but they carry a degree of seriousness and mutual respect, stronger than a gentlemen's agreement.

Generally-speaking, the short answer is no. A Memorandum of Understanding outlines the intention of making a legal agreement, but it is not a legally enforceable document itself. While it is not enforceable, it is a powerful tool for helping you outline what the final, legal agreement will include. In most cases, unless money is exchanged an MOU will not stand up in court if challenged.
You may want to seek legal advice to help determine the enforceability of your Memorandum of Understanding.

Since MOUs are often not binding and just a "contract to contract," you may be wondering why you should take the time to make the document. The first benefit of creating this document is that it makes you and your future partner think through the details of your future business arrangement before you enter a binding agreement. Plus, it gives you a preview into what it may be like to work with the potential partner or business. What is their work ethic? Do they seem respectful of your time? Do they take too long to make decisions? Do they appear reluctant to want to put anything into writing? Can they attribute enough financially to support the project? It is a good time to take the opportunity to get to know your future partner before you take the next step.

A memorandum of understanding (MOU or MoU) is a formal agreement between two or more parties. Companies and organizations can use MOUs to establish official partnerships. MOUs are not legally binding but they carry a degree of seriousness and mutual respect, stronger than a gentlemen's agreement

Similar to a contract, a memorandum of understanding is an agreement between two or more parties. Unlike a contract, however, an MOU need not contain legally enforceable promises. While the parties to a contract must intend to create a legally binding agreement, the parties to an MOU may intend otherwise

You can cancel the MOU only if the builder has contravened the MOU. If the MOU is cancelled your father will not be liable to pay the balance amount to the builder. Your father can seek the recovery of the amount already paid to him once the MOU is cancelled.


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