A Memorandum of Understanding (“MOU”), is used when the parties want to record their intention to cooperate and set out general rules of interaction, but are not yet ready to enter into a fully legally binding contract. In business, the public sector and non-profit projects, an MOU serves as a kind of “roadmap” for the partnership: it describes the objectives, roles, expected outcomes and key processes of the joint work.
In most cases, an MOU is treated as a document that does not create legally enforceable obligations. It reflects “serious intentions”, moral commitments and the political or business will to cooperate, but does not always provide for direct legal recourse in case of breach. At the same time, if an MOU uses strict wording regarding rights and obligations, a court may recognise such a document as partially or fully binding, which is why the wording must be chosen carefully.
Below are the key steps and elements that will help you prepare a “proper” memorandum that is clear to both partners and resistant to misunderstandings.
Steps to follow to write a good Memorandum of Understanding
1. Clearly define the purpose and legal nature of the document.
Before you start drafting, you should determine the exact purpose of the MOU. This may be preparation for a future contract, the launch of a pilot project, testing a partnership or a framework agreement on cooperation in several areas. The structure of the document and the level of detail will depend on this purpose.
It is also important to decide whether the MOU is intended to be non-legally binding. Usually, the preamble or a separate clause expressly states that the memorandum records the intentions of the parties, does not create legally binding obligations and does not provide for financial commitments unless otherwise agreed separately. Such disclaimers are widely used in standard templates of international organisations and public authorities.
2. Accurately describe the parties and their authority.
At the beginning of the memorandum, the parties are described in detail: full names, legal form, registration details and addresses. For large organisations, it is often useful to additionally describe each party’s role in the future cooperation (for example, “technical partner”, “organiser”, “financial donor”).
Special attention should be paid to the persons signing the MOU. Practical guidelines on preparing memoranda emphasise that the document must be signed by duly authorised representatives who have the right to act on behalf of the organisation. This reduces the risk that the document will be challenged internally or by supervisory bodies.
3. Define the subject matter and scope of cooperation.
A good MOU always answers the question: “What exactly have we agreed on?” The section on the subject matter and scope of cooperation typically describes:
- the areas of collaboration (for example, joint research, data sharing, marketing cooperation, joint educational programmes);
- the time frame and geographical scope of the projects;
- the target groups or markets at which the cooperation is aimed.
The wording should be specific enough for the parties to have a shared understanding of the expected outcome, but not so detailed as to “constrain” the partners with excessive detail that would be better placed in subsequent contracts or annexes.
4. Set out the roles, responsibilities and resources of the parties.
One of the strengths of an MOU is the ability to record in advance who does what and who is responsible for what. Practical guides recommend describing:
- the main responsibilities of each party (organising events, providing infrastructure, technical support, staff involvement);
- the volume and nature of resources contributed by the parties (personnel, premises, equipment, information support);
- coordination mechanisms (joint steering committee, designation of contact persons, regular meetings).
Even if the document is not intended to be legally binding, this level of detail reduces the risk of mismatched expectations and helps the parties plan their resources.
5. Define the term and termination of the memorandum.
An MOU generally states the effective date and expiry date, or provides for an open-ended term linked to specific events. It is also advisable to address:
- the possibility of extension by mutual agreement;
- the right of each party to terminate the memorandum with prior notice within a specified period;
- what happens to ongoing projects and commitments upon termination (for example, completion of current initiatives or a separate agreement on their future).
6. Take confidentiality and data protection into account.
Even if the MOU does not itself contain trade secrets, the parties will often exchange sensitive information in the course of cooperation. It is therefore advisable to include confidentiality provisions and, when dealing with personal data, to refer to applicable data protection laws (for example, GDPR for EU-based projects).
In some cases, confidentiality and data processing are governed in detail by a separate agreement, and the MOU simply refers to that agreement.
7. Address potential conflicts of interest.
If one party funds projects and the other evaluates them or allocates resources, conflicts of interest may arise. Good practice suggests expressly stating how such situations will be identified and managed so as to avoid concerns about bias or abuse.
This may include an obligation to disclose potential conflicts, a prohibition on making certain decisions in a conflict situation, and a procedure for reviewing such cases.
8. Applicable law, language and structure of the document.
For international projects, the MOU typically includes clauses on the applicable law and the language in which the document is drafted and which will take precedence in case of discrepancies between translations.
In terms of structure, many templates and guidelines repeat similar elements:
- preamble and brief background of the cooperation;
- purpose and subject of the memorandum;
- principles of cooperation;
- obligations and resources of the parties;
- governance and coordination;
- confidentiality, data and intellectual property;
- term, amendments and termination;
- dispute resolution;
- signatures and details.
9. Style, templates and legal review
Open sources are broadly consistent on the main recommendation: an MOU should be written in clear and straightforward language, without unnecessary legal jargon, with the most specific wording possible and no ambiguity. This is especially important because many project participants may not have legal training but still rely on the memorandum in their daily work.
Templates available online or from international organisations are a useful starting point, but they need to be adapted to the specifics of the particular project, jurisdictions involved and sectoral requirements.
Before signing, it is advisable to have the MOU reviewed by a lawyer, especially where cross-border cooperation, complex funding structures or sensitive data are involved. An expert will help adjust the wording so that the document reflects the parties’ original intention and is neither excessively “rigid” nor, conversely, too vague.
10. Obtain approval from the relevant bodies
Depending on the nature of the agreement, approval from relevant bodies may be required before the MOU is finalised. For example, suppose a Memorandum of Understanding is concluded by a public institution or a non-profit organisation. In that case, approval by the board of directors or other governing bodies may be necessary.
In conclusion, a Memorandum of Understanding is a useful tool for establishing working relationships or partnerships between two parties. By following the steps described above, you can draft a solid MOU that clearly sets out the terms of the arrangement and helps ensure smooth and successful cooperation.
How COREDO can help you
If you need to prepare an MOU with a foreign or local partner or a public authority, it is important not only to express your intentions correctly, but also to avoid unintended legal consequences. COREDO’s experts can:
- help you determine whether an MOU is sufficient in your situation or whether a fully fledged contract is required;
- draft or revise the text of the MOU, taking into account applicable law and sector-specific practice;
- adapt international templates to the specifics of your project and jurisdiction;
- support negotiations with your partner up to the signing of the document.
This way you will obtain a memorandum that honestly and clearly reflects the parties’ intentions, reduces the risk of misunderstandings and creates a solid foundation for further contractual arrangements.