Memorandum of understanding

A memorandum of understanding (MoU) is a type of agreement between two (bilateral) or more (multilateral) parties. It expresses a convergence of will between the parties, indicating an intended common line of action.[1] It is often used either in cases where parties do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen's agreement.[2][3]

Whether a document constitutes a binding contract depends only on the presence or absence of well-defined legal elements in the text proper of the document (the so-called "four corners"). The required elements are offer and acceptance, consideration, and the intention to be legally bound (animus contrahendi).[4] In the US, the specifics can differ slightly depending on whether the contract is for goods (falls under the Uniform Commercial Code) or services (falls under the common law of the state).

Many companies and government agencies use MoUs to define a relationship between departments, agencies or closely held companies.[5]

  1. ^ Shaelou, St Phanie Laulh (2010). The Eu and Cyprus: Principles and Strategies of Full Integration. Martinus Nijhoff Publishers. ISBN 978-90-04-17619-5. Archived from the original on 2020-06-09. Retrieved 2020-06-05.
  2. ^ "What is a Memorandum of Understanding - MOU?," Archived 2021-04-17 at the Wayback Machine, Investopedia.com, retrieved February 12, 2019
  3. ^ Leader, Rita (attorney), "Contract or Memorandum of Understanding – The differences and uses you should know," Archived 2021-02-25 at the Wayback Machine March 2, 2017, Houston SCORE (Service Corps of Retired Executives), Houston, Texas; retrieved February 12, 2019
  4. ^ Shri, Vikesh (2020-05-22). "Memorandum that is effective, concise, and clear". Meramaal. Archived from the original on 2020-06-05. Retrieved 2020-06-05.
  5. ^ Kozami, Azhar (2002-01-01). Business Policy and Strategic Management,2e. Tata McGraw-Hill Education. p. 439. ISBN 978-0-07-044470-6. Archived from the original on 2020-06-05. Retrieved 2020-06-05.

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