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This Memorandum of Understanding is for use between two or more Parties that are interested in working together on a particular project. It is intended as a starting point for the Parties, as it enables them to set out the preliminary understanding between one another, and can help them to work towards a more formal agreement.
This Memorandum is designed to not be legally binding, meaning that the Parties may not actually be legally obliged to comply with it. This is because in many cases, Parties may not actually be certain about the specific terms which they can agree to, but they still find it beneficial to put something in writing, outlining some broader goals (such as the general nature of the project), and confirming that they will act in good faith in pursuit of those goals. Often, Parties may sign a Memorandum of Understanding outlining some general agreement, and then will go away and make some further investigations before working out the finer details.
Although a Party may not be legally bound by this Memorandum, many Parties feel compelled to comply with it anyway - firstly, because the Memorandum does actually describe what they intend to do, and secondly because they are wary that a failure to comply can harm their professional reputation and their ongoing relationships.
How to use this document
Use this Memorandum early in the negotiations between the Parties. In most cases, it is inappropriate to use this Memorandum for the final agreement between the Parties (a legally binding contract may be more suitable).
Record the details of each Party, and the Project that they are interested in pursuing. If the Parties have specific responsibilities in relation to the Project, then the details of those responsibilities can be included as well. For example, if one Party is going to obtain information about relevant costings for the Project, while another Party will obtain information about appropriate marketing strategies, then these responsibilities can be described in the document.
Once the Memorandum has been completed, each Party may sign it and have their signature witnessed by an independent adult. Each Party may then keep a copy of the Memorandum for their own reference.
The Memorandum may then be used as a point of reference to guide the negotiations as the Parties move forward towards a final agreement. If a legally binding contract is required, consider some of our other available templates, including:
As the Memorandum is not legally binding, there is no law that directly applies to it.
However, ordinary principles of contract law, as provided by the common law, may be applied in interpreting and understanding the agreement between the Parties.
In the event that a Party acts in bad faith, causing another Party to suffer loss, then general principles of equity, estoppel, or laws dealing with misleading and deceptive conduct may become relevant.
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