Memorandum of Understanding | Definition & Example
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After studying the topic of pre-contract documents, the Journal of Strategic Contracting and Negotiation found that companies using Memorandum of Understanding documents encounter 30% fewer disputes than those without.
This statistic makes sense to us as the purpose of Memorandum of Understanding documents are to clearly communicate the expectations of working together on joint projects. These formal agreements go a long way in decreasing business arguments, especially early on in the partnership.
So, do you want to know more about these flexible agreements and get a Memorandum of Understanding meaning? Join us in the article below!
What is a Memorandum of Understanding?
It is a formal but non-binding document shared by two or more parties in an agreement. Within a Memorandum of Understanding, the terms and intentions of the members who want to collaborate or form a partnership can be found. For example, a Memorandum of Understanding will include the following information:
Contents of a MOU
Since a Memorandum of Understanding is non-binding, the parties cannot use it to legally force others to uphold their commitments stated in the agreement. However, it plays an important role in clearly communicating the intentions of everyone in a partnership before they decide to move forward and create a legally binding contract. Here are a few elements commonly found in a Memorandum of Understanding:
Pros and Cons of a MOU
As we learned, the contents of a Memorandum of Understanding ensure that it is a comprehensive document for all parties involved. Now, let’s look at the pros and cons of creating this document.
Pros
Cons
How to Write a Memorandum of Understanding
Although these flexible documents are not as powerful as a formal agreement, they are essential for building collaborative partnerships. To create one, look at our simple step-by-step guide below. You can modify it and use it as a starting point for your business collaborations.
- Give your Memorandum of Understanding a title, such as “Memorandum of Understanding Between [Company 1] and [Company 2].”
- Write a short introduction in which you explain the purpose of the partnership.
- Next, you want to go into deeper detail about the partnership’s purpose. Here you can give exact reasons for the joint venture and list the objectives the partnership wishes to achieve.
- List all the parties involved in the agreement by name and supply their roles and responsibilities.
- Now, you can provide the terms of the agreement. These must include each party’s contributions and resources.
- Add start and end dates of the partnership with a paragraph explaining how to renew the partnership or completely terminate it.
- Lastly, you want to add electronic signature capability to your Memorandum of Understanding. This will allow stakeholders to digitally sign the document quickly and conveniently to acknowledge the terms of the Memorandum of Understanding.
- Read your agreement and remember to add sections for handling confidential data or disputes.
- Send the agreement to parties involved in the partnership so that they can read the document and advise if it needs to be amended.
Memorandum of Understanding Example
Here is what a Memorandum of Understanding sample document could look like:
The Key to Document Generation Solutions
Thanks for reading our article on Memorandum of Understanding agreements. They are flexible tools that are non-binding but essential for exploring partnerships. If you are looking for a way to create these adaptable documents lightning-fast without custom development, we recommend you check out Titan.
Our powerful platform integrates into Salesforce, so you can generate documents pre-filled with data and a click of a button. We can help you build Memorandum of Understanding agreements or any other document without code to nuke manual paperwork and optimize efficiency.
The sky’s the limit with Titan. Teams get to read fields from Salesforce objects and reports and then display them in any format they need. We can give you the power to add interactive capabilities to write data directly from Memorandum of Understanding agreements to any Salesforce object. Titan can work with standard and custom Salesforce objects or data structures you have set up in your system.
You can also take it a step further and streamline complex MOU document flows from end to end between your stakeholders for better collaboration experiences. To finish it off, Titan can store Memorandum of Understanding documents in many locations, such as Google Drive, Box, or other well-loved third-party apps.
To learn more about using Titan to generate Memorandum of Understanding documents directly from Salesforce, contact us through our social media channels below.
See you soon.
Disclaimer: The comparisons listed in this article are based on information provided by the companies online and online reviews from users. If you found a mistake, please contact us.
Frequently Asked Questions
Is a MOU legally binding?
No.
Why is a MOU important?
The MOU agreement clearly explains how one or more parties can collaborate in a partnership. When all those involved sign a MOU, they acknowledge that they understand their roles and responsibilities in the partnership. They are also aware of the goals the partnership is trying to achieve, ensuring minimal misunderstandings between all those involved.
For these reasons, a MOU is an important tool for setting the foundation of partnerships.
