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.
In business, an MoU is typically a legally non-binding agreement between two (or more) parties, that outlines terms and details of a mutual understanding or agreement, noting each party's requirements and responsibilities -- but without establishing a formal, legally enforceable contract (though an MoU is often a first step towards the development of a formal contract)
An MOU clearly outlines specific points of an understanding. It names the parties, describes the project on which they are agreeing, defines its scope, and details each party's roles and responsibilities.
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