Contract Law

Memorandum of Understanding (MOU)

What is a Memorandum of Understanding? A memorandum of understanding (MOU), also sometimes referred to as a Letter of Intent (LOI) is a document that describes an arrangement between two or more parties. Generally it is not legally binding, but it does indicate the establishment of an informal business relationship that will continue for some period of time usually set forth in the MOU. Quite often, the MOU is a document preliminary to a definitive, legally binding agreement.

Except for some standard terms generally found in all MOUs, MOUs vary greatly and are drafted to fit the particular parties’ needs and objectives for the relationship. Some general provisions commonly found in MOUs include:

• Identity of parties and contact information;
• A description of the project or the background of the project; why the MOU is being entered into at this particular time;
• Specified activities;
• Timing for implementation of activities;
• Upfront expense and continuing costs;
• Each party’s roles and responsibilities;
• Deadline for activities;
• Term of agreement;
• Confidentiality provisions;
• Non-solicitation of clients, customers or the other party’s employees;
• Ownership of any Intellectual Property or other results;
• Allocation of revenues; and
• Insurance and indemnification