What an MOU is for
A memorandum of understanding records the mutual intentions of two to four parties exploring a cooperation, before either side is ready to sign a formal, fully binding agreement. It sits between a conversation and a contract.
The part most MOUs get wrong is treating the whole document as one binding or non-binding block. A well drafted MOU names which specific provisions bind immediately, commonly confidentiality, costs, and governing law, and which describe intentions that are not yet enforceable, commonly the scope of cooperation itself.
What's typically included
- Purpose and Background — why the parties are exploring this cooperation
- Scope and Cooperation — what each side will actually do
- Roles and Contributions — who is responsible for what, stated specifically rather than in general terms
- Governance — how decisions get made while the MOU is in effect
- Exclusivity — where included, a period during which parties won't pursue the same cooperation elsewhere
- Confidentiality — protecting what's shared during the cooperation
- Intellectual Property — who owns what's created or contributed
- Costs — who pays for what during the cooperation itself
- Non-Binding Nature — the clause that states, explicitly, which sections are and are not enforceable
- Publicity — whether and how the parties can announce the arrangement
- Term and Termination, Governing Law and Dispute Resolution — a shelf life, so the MOU cannot linger forever, and a named forum if something goes wrong
Is an MOU legally binding?
Usually only in part, and only if it says so. Labeling a document "non-binding" is a starting point, not a guarantee. In several jurisdictions, courts look past the label to the substance of what was agreed and how the parties behaved, and can treat conduct plus contractual language as binding despite a non-binding label. This is exactly why the Non-Binding Nature clause needs to be specific rather than a single generic sentence, and why the governing law you choose matters. See how this plays out under real law on our jurisdiction pages below.
Where MOUs go wrong
- No Non-Binding Nature clause at all, leaving every provision open to argument
- Roles described as "collaborate" or "support" instead of a specific, attributable contribution
- No termination date, so the MOU outlives the cooperation it was meant to describe
- Silence on costs, discovered only once an invoice is disputed
- No governing law or dispute resolution clause
How it works
- Answer a guided interview. Parties, purpose, scope, and governing law.
- Get a free preview. The plain English guide and a completeness check, no account required to see what's included.
- Unlock when you're ready. US$19.99 for the full text, the Word download, and the lawyer memo.
MOU templates by country
DealDocs maintains MOU templates for 21 countries, each drafted for its own law:
Frequently asked questions
Is a Memorandum of Understanding a contract?
Parts of it usually are. The Non-Binding Nature clause names which provisions are enforceable as a contract and which describe intentions that are not, which is why that clause is the most important one in the document.
How long should an MOU last?
Long enough to complete the cooperation it describes and no longer. DealDocs includes a Term and Termination clause specifically so the MOU has a shelf life instead of lingering indefinitely.
Can an MOU turn into a full agreement later?
Yes, and that's the most common path. An MOU records the shared understanding first; a fully binding agreement, or in an acquisition context a Letter of Intent followed by definitive agreements, typically follows once the details are settled.
Does an MOU need a lawyer to review it?
DealDocs gets you to a strong working draft with a completeness check built in, but the Non-Binding Nature clause and governing law are exactly the kind of provisions worth a final review by a lawyer licensed in your jurisdiction before signature.
Free to draft and preview. Unlock the full text and downloads for US$19.99.
Start your document free