Definition

memorandum of understanding (MOU or MoU)

Part of the Business terms glossary:

A memorandum of understanding (MOU or 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. Often, MOUs are the first steps towards a legal contract. In US law, a memorandum of understanding is synonymous with a letter of intent (LOI), which is a non-binding written agreement that implies a binding contract is to follow.

MOUs are popular in multinational international relations because, unlike treaties, they take a short time to ratify and can be kept confidential. MOUs may also be used to modify existing legal treaties.

See also: prime contractdigital signature, contracting officer, partner relationship management, partner

 

 

Continue reading about memorandum of understanding:

Here is an example of a MoU between the National Science Foundation and NASA.

Oil-for-Food is an international MoU.

This was last updated in January 2011
Posted by: Margaret Rouse

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