Memorandum of Understandingwith expert lawyers

A Memorandum of Understanding (MoU) is a document that outlines the basic terms of a commercial arrangement. While it’s not legally binding, it’s often used as a stepping stone to more detailed documents and legally binding agreements later on.

In other words, an MoU can be seen as a first draft or blueprint of what both parties are agreeing to, so it can be formalised later.

While a Memorandum of Understanding is not usually legally binding, it can be made legally binding if the document clearly states that both parties intend it to be legally binding. It should also satisfy the other elements of a legal contract, such as offer and acceptance.

A Memorandum of Understanding can be drafted to suit your business’s specific needs and what you are agreeing to. It should set out the key terms of your business relationship moving forward.

For example, if you are entering into an arrangement to work on a project with another business, you might put an MOU in place before a formal legally binding agreement so both parties are clear on what is proposed. In that case, the MOU could cover payment, IP rights, project duration, required resources, confidentiality, and any privacy issues.

A Memorandum of Understanding is intended to set out the key terms of your business relationship, or the agreement you're entering into, without the legally binding element. This means that if something goes wrong, or if a party does not follow through on a promise, there are generally no grounds to take legal action. It's commonly used as a stepping stone to the more formal agreements that come later.