What is a "memorandum of understanding" (MOU)?

A memorandum of understanding (MOU) is recognized as a non-binding agreement that outlines the terms of a proposed arrangement or understanding between parties. This characteristic is crucial because it allows parties to express their intentions and clarify the general framework of cooperation without committing to the legal obligations that come with a formal contract.

MOUs are often used in situations where parties wish to collaborate or seek to establish a working relationship, yet are not ready to enter into a legally binding contract. This flexibility enables parties to outline expectations, responsibilities, and goals in a clear manner, establishing an amicable foundation for further discussions or negotiations.

The nature of an MOU means it typically does not possess the enforceability of a contract, as it lacks essential components such as consideration and mutual consent that give rise to legal liability. Therefore, while an MOU may serve as an important tool in establishing an understanding between parties, it operates primarily as a guiding framework rather than a document that strictly dictates legal obligations.