Memorandum of Understanding
- Your first template is free
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
A Memorandum of Understanding is a written agreement before a formal contract is drawn up between parties. It's not legally binding, but think of it as a promise of good faith.
We'll go through what a Memorandum of Understanding looks like, what it should have on it, and even where to get some neat templates so you can save yourself a bunch of time.
A Memorandum of Understanding, sometimes referred to as an MOU, is typically used as a preliminary written agreement before a formal contract is drawn up between parties. While it isn't a legally binding document, it can be used during the negotiation stage to express a common understanding and vision between the two sides involved.
Once drafted and signed, a Memorandum of Understanding can be used as a reference guide as negotiations continue and the parties work towards a final agreement.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Generally speaking, a Memorandum of Understanding is useful in two circumstances:
A Memorandum of Understanding and a Letter of Intent serve very similar purposes: they are both used during the negotiation stage of a deal, in order to set out proposed terms going forward.
A Letter of Intent, however, is more commonly used than a MOU, and you'll generally find that most large business transactions use them to provide a structure as to how the agreement will go ahead.
Another key difference between the two documents is that a Letter of Intent can hold up in court as a legally binding document.
As you'd expect, there's no 'one-size-fits-all' rule when it comes to a Memorandum of Understanding. The document should be tailored to each individual situation, and take into account the parties involved and the common goals they're working towards.
A few key points to consider when drafting your Memorandum of Understanding include:
While a Memorandum of Understanding is not a legally binding document, it is still an effective tool to use between parties entering into negotiations. Typically, parties involved feel obliged to cooperate with the terms and conditions set out in the document. This is because failing to do so can harm their professional reputation.
A Memorandum of Understanding should also benefit both parties enough to encourage compliance from both sides.
As a non-legally binding document, a lawyer is not strictly necessary to draw up a Memorandum of Understanding. However, it is always a good idea to use a Memorandum of Understanding template to ensure that you have included all of the appropriate information.
Asking a lawyer to look over the final document also adds a level of protection for both parties involved.
A Memorandum of Understanding does not need to be more than a few pages long. It should only document essential information that both parties should know to move forward with their partnership.
While every MOU is unique, each one should provide answers to the following questions
Once written, the Memorandum of Understanding should be signed by all parties involved, preferably in front of an independent witness.
The usefulness of a Memorandum of Understanding should not be underestimated. Using a template or following an example, is a great way to make sure you're along the right lines when it comes to drafting your MOU.
Learn about the key points of share sale agreements and find templates you can download and customise to your needs.
Create a watertight joint venture agreement with the help of a legal template.
Use a customisable template to help ensure your incorporated joint venture agreement is legally sound.
How to download and customise a service delivery agreement to quickly protect your business.
How to craft a legally binding contract with the help of a template.
There's no need to start from scratch with a professionally-made template you can download.
Use a legal document template to craft an agreement that offers clarity on what's expected from all parties.
How to make sure everything's above board if you plan to rent out equipment to your customers.
Find out how to craft a bill of sale with the help of a customisable template.
Use a hire purchase agreement template as the basis for creating a watertight legal document.
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.