A Memorandum of Understanding is a document which outlines the details of an agreement between two or more parties who intend to work together toward a common goal the document is often abbreviated and referred to as an MOU.
An MOU is usually less complex and detailed than a contract, however it still provides a framework for everyone involved to use in undertaking a project or working agreement.
A Memorandum of Understanding is excellent to use when you’ve made a verbal agreement and you want to confirm and solidify the terms you’ve agreed upon without creating a formal contract or involving lawyers.
While a MOU is not a formal contract, it is far more formal than a handshake and is given weight in a court of law should one party fail to meet the obligations of the memorandum.
It is not fully binding in the way that a contract is but it is stronger and more formal than a traditional gentlemen’s agreement.
So in this way it may be used as a kind of informal contract to set forth the basic principles and guidelines under which the parties will work together to accomplish their goals and each party acknowledges their commitment to the project in writing.
However again they’re not strictly legally bound.
In many cases a Memorandum of Understanding may serve as a precursor to a more formal contract.
Since the purpose of an MOU is to define and document the parameters of a working relationship between two parties. The body of the document typically will address the reason for the partnership, the anticipated outcome, the general terms and conditions that will govern the business arrangement including each party’s requirements and responsibilities.
One reason why the Memorandum of Understanding is such a fantastic business tool is its flexibility, it can be used in a wide variety of settings for business people, entrepreneurs and organizations it can be made as simple or as complex as the situation calls for.
We’ll be addressing this more in the video how to write your memorandum of understanding and we have both a quick and an advanced version of those videos.
For now all you need to know is that when you draft an MOU you’re basically saying to your partner’s, these are the details of the understanding we’ve made and we’re agreeing to move forward on it.
As an instrument to clarify communication and spearhead the direction of an endeavor, the memorandum is an indispensable tool in just about any business setting that involves two or more parties.
I also suggest that you visit www.moutemplates.com for lots of great information and many more tools to create your own Memorandum of Understanding