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What is a Memorandum of Understanding?

By Shannon Kietzman
Updated May 16, 2024
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A memorandum of understanding (MOU) is an agreement between two parties in the form of a legal document. It is not fully binding in the way that a contract is, but it is stronger and more formal than a traditional gentleman's agreement. Sometimes, the term is used as a synonym for a letter of intent, particularly in private law. A letter of intent expresses an interest in performing a service or taking part in an activity, but does not legally obligate either party.

In international public law, a memorandum of understanding is used frequently. It has many practical advantages when compared with treaties. When dealing with sensitive or private issues, the document can be kept confidential, while a treaty cannot.

It can also be put into effect in a timelier manner than a treaty, because it doesn't require ratification. In addition, a memorandum of understanding can be modified without lengthy negotiations, which is especially useful, except in multilateral situations. Most transnational aviation agreements are this type of agreement.

An example of an international memorandum of understanding is the Oil For Food Program, which was created by the United Nations in 1995 and lasted until 2003. This agreement allowed Iraq to sell its oil to the world in exchange for humanitarian help, such as food and medicine for Iraqi civilians. It did not, however, allow Iraq to rebuild its military.

A national example is the Key West Agreement, also known by its official name, the Function of the Armed Forces and the Joint Chiefs of Staff. It was created in 1948 and outlined the division of air assets between the different branches of the military. While it has since been modified, this document continues to be the guideline for the division of these assets today.

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Discussion Comments

By anon1001910 — On Jul 23, 2019

My favorite template to use for writing a memorandum of understanding is the one that gets done completely automatically in Word. All I have to do is answer the questions and the mou gets written for me.

By anon991732 — On Jul 14, 2015

How do you withdraw from a binding MOU?

By OeKc05 — On Jul 09, 2012

Did you know that you can get a free memorandum of understanding template online? There are several sites out there that make these available to the public.

My dad uses them in his business. He builds shelves, chairs, and other wooden items for people, and before he starts these projects, he draws up a memorandum of understanding to be signed.

The template sounds very much like lawyer talk, but it is fairly easy to understand. There are blanks that you fill in, such as the name of each party and what is expected of each.

So, you can download the PDF once and print one out each time you need to write in customized information. You can even type it in, if you are so inclined.

By orangey03 — On Jul 08, 2012

A memorandum of understanding between two companies can be a lot easier to draw up and use than a legal contract. You don't have to worry with getting it notarized, and just the simple fact that it your agreement is in writing and is signed by both parties is usually enough to make someone hold up their end of the deal.

I used to work for a design company, and we entered into memorandums of understanding with all our clients. It was just easier that way, and having them sign the agreement made them think that they were legally bound to pay us for the work we did.

Now, I do a lot of freelance painting. Before I start on a painting, I will have the client sign a memorandum of understanding that states what I am responsible for doing and what he or she is expected to do. The client agrees to pay me half up front and the rest when the painting is done, and I agree to send them pictures of the painting periodically to show them that I am actually working on it. I also agree to complete the painting within a certain time frame.

By Perdido — On Jul 07, 2012

@wavy58 – I think that it would be in the best interest of both nations involve to adhere to the memorandum of understanding. After all, if you break your end of the bargain as a nation, then the other nation has reason to distrust you, and this could lead to both economical conflict and war.

I don't think that countries enter into memorandums of understanding lightly. True, they can be altered, but I would imagine that both parties would have to agree in order for this to happen.

I really don't know how legally binding they are. Since people are always suing each other over silly things and winning, you would think that someone could surely get some money out of someone else who violated an actual agreement like a memorandum of understanding, though.

By wavy58 — On Jul 07, 2012

If it isn't fully binding, what is a memorandum of understanding between two nations really worth? It seems to me that if it can be changed without a lot of red tape, then it isn't very solid.

Are there any laws in place regarding honoring a memorandum of understanding? It really sounds like the two parties are just taking each other's words for it.

I would be wary of entering into this sort of agreement with anyone. It just doesn't sound like the other party has much motivation to hold up their end of the agreement.

By anon161978 — On Mar 22, 2011

What is the Stamp duty payable on MOU?

By anon159443 — On Mar 12, 2011

What is the difference between an agreement and an MOU?

By anon101593 — On Aug 04, 2010

I would like to know how to write an MoU.

By anon82780 — On May 07, 2010

should MOU be followed by a definite agreement?

By anon79562 — On Apr 23, 2010

is time essential in mou?

By anon76141 — On Apr 09, 2010

I need everything you can tell me about memos and letters, e.g. their differences and importance.

By anon75227 — On Apr 06, 2010

Kindly tell me the components of a memo of Understanding. Thanks, Kashif K., Advocate High Court

By anon50641 — On Oct 30, 2009

Kindly define for me in clearer words, what is the meant by M O U S?

Thanks, Kashif; Advocate High Court

By anon44970 — On Sep 12, 2009

What happens if an memorandum of understnding conflicts with a bargaining agreement?

By anon22118 — On Nov 28, 2008

is a witness required in a Memorandum of Understanding?

By anon15222 — On Jul 05, 2008

Importance of Memorandum of Understanding?

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