Memorandum of Understanding vs Similar Documents MOU vs ContractĪn MOU is not a contract. Government bureaucrats, on the other hand, like MOUs because they are informal and allow them to avoid the red tape and extended timelines associated with formal contracts. Lawyers, for example, generally do not like MOUs because of their legal ambiguity. MOUs are popular among certain industries and less so among others. Under international law, MOUs are considered a type of treaty. In 1972, President Richard Nixon signed an MOU with the Soviet Union that established a telecommunication link between the two countries in order to prevent nuclear war. Bush agreed to a 32-page MOU that created guidelines for their televised presidential debates. For example, during the 2004 United States presidential campaign, John Kerry and George W. Governments use MOUs within their agencies and in international relations. It may also be called an offering memorandum. This document explains the information that the parties have related to whatever situation or project they're involved in. prenuptial agreement or a sale of property.Īnother form of MOU used in business and for personal reasons is an information memorandum. Outlining conditions of transactions: companies may use MOUs to serve as an addendum to a legal contract-e.g. Individuals and organizations use memoranda of understanding in a variety of situations including:Ĭreating a payment schedule: especially if the contract does not specify one.Įxplaining intentions: organizations may use an MOU to detail their intentions and purpose related to a contract.
With the information provided, you'll be better prepared to utilize MOUs.
#MOU MEANING IN BUSINESS HOW TO#
In this guide, we detail the differences between MOUs and other business agreements, how to write one, and when to use one. Memorandums of Understanding are somewhat complicated documents that occupy the space between informal non-binding agreements and legally binding contracts. The Essential Guide to Using a Memorandum of Understanding
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