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An MOU will typically be used in the not-for-profit sector when organisations wish to co-operate and/or share information with each other, allowing each to make the most of the other's specialist skills or knowledge. It is the least formal type of collaborative agreement.
Before reading on, make sure that you have read our overview Guide to Working With Other Organisations, which can be downloaded from the Working with Others topic page.
An MOU will typically establish a framework for the collaboration between the organisations and express the common goals or vision of the parties to the MOU. In general, an MOU will not deal with the specific details of particular projects. An MOU is therefore usually more of a 'high level' agreement.
An MOU is generally considered ‘an agreement to agree’ or an agreement to enter into a more specific and comprehensive contract or agreement at a later time after further negotiations. However this is not always the case. To help avoid any uncertainty about whether an MOU is legally binding, your organisation should make sure the MOU contains a specific statement to the effect that it is not intended to create legally binding obligations.
As an MOU is normally not a legally binding document, it is not appropriate to use an MOU if your organisation wants to be able to enforce a part of the agreement. If you need to rely on the other organisation taking certain actions and/or if your organisation stands to lose money if the other party doesn’t act – your organisation should enter into a contractual arrangement.
The information on this website is intended as a guide only, and is not legal advice. If you or your organisation has a specific legal issue, you should seek advice before making a decision about what to do.
More detailed information is contained in our fact sheet below regarding:
- what is an MOU and when should an MOU be used?
- what issues an MOU will cover? and
- your organisation's obligations under an MOU and whether an MOU is a legally binding document.