Memorandum of understanding
What is a memorandum of understanding?
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. In many respects, a MOU is similar to a letter of intent, and is used to acknowledge a willingness and the ability to do business. Often both parties involved in a business transaction will sign a MOU reflecting their serious intent to carry out certain business activities. Execution of a MOU early on can save you considerable time and expense when preparing the definitive contract itself.
Do you need an attorney to review a memorandum of understanding?
Yes – MOUs are usually detailed documents that require meticulous review and drafting. Hiring an attorney to aid in the review or preparation of such documents is essential.
An attorney can help you review and draft a MOU to make sure that the major details regarding the transaction have been agreed on by both parties. Further, your attorney will also prove invaluable when you later draft the final contract for the transaction.