But, again, language like this in the MOU would make it legally binding. If an offer is included, there is an expectation, usually of money or exchange of service. Look for these key elements in an MOU they make it legally binding. However, there are cases in which a clause within the MOU renders it legally binding. The MOU is usually a good first step to a legal agreement, but in and of itself is not legally binding. An MOU is similar to a handshake, where the integrity of both parties is the only binding force involved. In the case of a memorandum of understanding, the MOU serves to formalize a goal between two parties without making it legally binding. It includes agreed objectives and assigns risk. When two parties enter into an MOA, the MOA is a formal understanding of what is expected between the parties. Is a Memorandum of Agreement Legally Binding and Enforceable?Ī memorandum of agreement (MOA) is a legally binding and enforceable type of contract. There are a few differences between a Memorandum of Agreement with a Memorandum of Understanding (MOA) that are worth noting.Īn MOU is not legally binding in most casesĪn MOU can be used for simple agreements not involving moneyĪn MOA is reserved for more complicated agreements than involve exchange of money for servicesĪn MOU includes a simple statement of goals – like a formal handshakeĪn MOA uses legal language to create a statement of “general understanding” It needs to be specific but straightforward enough to answer the who, what, when, and how questions. Sometimes it’s easier to use the parties’ own words to draft an agreement of this nature. Finally, ensure a balance of expectations among the parties involved, so no one party shoulders more of the responsibilities.

You should also try and compose it with positive language, describing what a party will do, not what they won’t. Overall, you want the agreement to be understood by everyone involved, so use simple and easy-to-understand language. In the case others are involved, you should provide copies. You will need to create photocopied records for all signatories. You will need everyone responsible for meeting the objectives to sign the MOA. It may be the case that there are parties involved in the review who will not be responsible for signing it. You will also need to determine who will be signing the MOA. Again, sticking with one person makes this part easier to handle. This is when any notes, changes, or additions from the reviewing parties are incorporated into a final draft. This way, you know everyone has seen and reviewed the MOA before signing. It is good practice to include a copy of the agreement and a sign-off sheet if multiple parties are involved in the review. The review is a chance for each party involved to ensure they are represented correctly and to ensure there is a general understanding of what is expected from the beginning. An agreement needs to be precise, and sometimes having one person responsible for drafting it helps keep it focused. You know what they say about too many cooks in the kitchen. This includes anyone who may be involved in completing the agreed objectives.Ĭhoose a single person to be responsible. You need to consider who will sign the MOA and who else will be cooperatively working together.

Steps to Completing a Memorandum of Agreementīelow are 5 Steps to follow when completing an MOA: Some of these sections include:ĭetailed outline of roles and responsibilities, delineated by the person responsible An MOU is used to describe each party's point of view about a project before entering into it.Įven though it is less than a formal contract, there are certain sections you want to make sure are included when completing an MOA. In business it can be used for:Ī memorandum of agreement is not the same thing as a memorandum of understanding (MOU). Still, it is less formal than aĪnd more formal than a verbal agreement. It is considered a legal document because of its signatures.

MOAs are usually used when money is involved, but that is not always the case. The memorandum lays out the agreed terms and outlines the steps to reach the desired goal of the agreement. A memorandum of agreement, or MOA, is a legal document describing a business partnership between two parties that have agreed to cooperate to meet an agreed objective or complete a project.

Contract memorandum of understanding