memorandum of understanding

A memorandum of understanding (MoU) records the broad terms on which parties intend to work together. Whether it is a binding contract depends on its terms and the intention of the parties, not on its title. If it contains definite terms, consideration and an intention to create legal relations, it is enforceable like any contract under the Indian Contract Act; if it says that a formal agreement is still to be signed, or is expressly non-binding, it is only a record of negotiations.

Governments use MoUs for cooperation with other states and with investors; these are usually not legally enforceable.

Example

The court held the memorandum of understanding binding because it fixed the price, the property and the date of completion, and nothing was left for further agreement.

In Indian law

• Sections 2(h) and 10, Indian Contract Act, 1872

See also

contract · agreement · non-disclosure agreement

Read more in the study notes

• Drafting a memorandum of understanding, petitions and PIL (Business Communications)