Memo of Understanding (MOU)
When other partners are involved you should provide specific, detailed information about the role they will serve in your initiative. For example, include a copy of the memorandum of understanding (MOU) – a business document that details the scope, monetary and other contributions, and work they will perform. These details will lend further credibility to your agreement and demonstrate you plan to work together to achieve your project goals. Funders want to see that partners are truly participating and not just lending their name because they are your friends or have similar interests.
Read this definition of a memo of understanding (MOU)
A memorandum of understanding (MoU) is a type of agreement between two (bilateral) or more (multilateral) parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used either in cases where parties do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen's agreement.
Whether a document constitutes a binding contract depends only on the presence or absence of well-defined legal elements in the text proper of the document (the so-called "four corners"). The required elements are offer and acceptance, consideration, and the intention to be legally bound (animus contrahendi). In the United States, the specifics can differ slightly depending on whether the contract is for goods (falls under the Uniform Commercial Code) or services (falls under the common law of the state).
Many companies and government agencies use MoUs to define a relationship between departments, agencies or closely held companies.
In Private Enterprise
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).
In Government and Public Affairs
In the United Kingdom, the term MoU is commonly used to refer to an agreement between parts of The Crown. The term is often used in the context of devolution, for example, the 1999 concordat between the central Department for Environment, Food and Rural Affairs and the Scottish Environment Directorate.
MoUs can also be used between a government agency and a non-commercial, non-governmental organization.
In Public International Law
In international relations, MoUs fall under the broad category of treaties and should be registered in the United Nations treaty collection. In practice and in spite of the United Nations Office of Legal Affairs' insistence that registration be done to avoid 'secret diplomacy', MoUs are sometimes kept confidential. As a matter of law, the title of MoU does not necessarily mean the document is binding or not binding under international law. To determine whether a particular MoU is meant to be a legally binding document (i.e., a treaty), one needs to examine the parties' intent as well as the signatories' position (e.g., Minister of Foreign Affairs vs. Minister of Environment). A careful analysis of the wording will also clarify the exact nature of the document. The International Court of Justice has provided some insight into the determination of the legal status of a document in the landmark case of Qatar v. Bahrain, 1 July 1994.
Advantages
One advantage of MoUs over more formal instruments is that, because obligations under international law may be avoided, they can often be put into effect without requiring legislative approval. Hence, MoUs are often used to modify and adapt existing treaties, in which case these MoUs have factual treaty status. The decision concerning ratification, however, is determined by the parties' internal law and depends to a large degree on the subject agreed upon. MoUs that are kept confidential (i.e., not registered with the United Nations) cannot be enforced before any United Nation's organ, and it may be concluded that no obligations under international law have been created.
Although MoUs in the multilateral field are seldom seen, the transnational aviation agreements are actually MoUs.
Source: Wikipedia, https://en.wikipedia.org/wiki/Memorandum_of_understanding
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