how a memorandum of understanding mou works
an mou is an expression of agreement to proceed it indicates that the parties have reached an understanding and are moving forward although it is not always legally binding it is a serious declaration that a contract is imminent under u s law an mou is similar to a letter of intent in fact arguably a memorandum of understanding a memorandum of agreement and a letter of intent are all similar documents all communicate an agreement on a mutually beneficial goal and a desire to see it through to completion although an mou is not necessarily legally binding it allows parties to prepare for signing a contract by explaining the broad concepts and expectations of their agreement communicating in clear terms what each party hopes to gain from an agreement can be essential to the smooth execution of signing a legal contract in the future mous communicate the mutually accepted expectations of the people organizations or governments involved they are most often used in international relations because unlike treaties they can be produced relatively quickly and in secret they are also used in many u s and state government agencies particularly when major contracts are in the planning stages contents of an mouan mou clearly outlines specific points of understanding it names the parties describes the project on which they are agreeing defines its scope and details each party s roles and responsibilities while not always legally enforceable an mou is a significant step because of the time and effort involved in negotiating and drafting an effective document to create an mou the participating parties need to reach a mutual understanding in the process each side learns what is most important to the others before moving forward an mou communicates the mutually accepted expectations of the people organizations or governments involved the process often begins with each party effectively drafting its own best case mou it considers its ideal or preferred outcome what it believes it has to offer to the other parties and what points may be non negotiable on its side this is each party s starting position for negotiations advantages and disadvantages of an moua memorandum of understanding allows all parties to clearly state all of their objectives and goals this makes for less uncertainty and prevents future unexpected disputes from occurring furthermore by clearly laying out what each party expects of the other an mou provides a blueprint for any contract both parties may or may not wish to draw up in the future the biggest drawback of an mou depending on your point of view is that it is not necessarily legally binding while in some cases this may be a benefit since neither party is required to do what they say in the mou they can simply walk away or change their expectations of course this all depends on the intent and legal language of the mou mous can take significant time and planning to create and if one party completely changes its requirements creating the mou would be a large waste of resources 