What is a "memorandum of understanding" (MOU)?

A "memorandum of understanding" (MOU) is recognized as a non-binding agreement that outlines the intentions and understanding between parties. It serves as a formal expression of a mutual agreement, typically when the parties are not yet ready to enter into a legally binding contract or wish to define the terms of their partnership or collaborative efforts. An MOU can detail the roles, responsibilities, and expectations of each party but does not create enforceable legal obligations.

This type of document is often used in various fields, including business, government, and non-profit organizations, to establish a clear understanding of what each party aims to achieve. Since it is not legally binding, it provides flexibility for the parties involved while still clearly communicating their intentions and operating principles.

In contrast, options that describe a legally binding contract or formal documents for dispute resolution suggest a level of obligation and enforcement that an MOU does not possess. Summaries of contractual obligations also imply an existing contract rather than an understanding yet to be formalized. Thus, the unique characteristics of an MOU as a non-binding agreement make it a useful tool for initiating collaboration while maintaining possibilities for future negotiations.