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A memorandum of understanding is a document that describes the broad outlines of an agreement that two or more parties have reached. MOUs communicate the mutually accepted expectations of all of the parties involved in a negotiation. While not legally binding, the MOU signals that a binding contract is imminent.
MOUs tend to be used for simple common-cause agreements which are not legally binding. The MOU is nothing more than a formalized handshake. Memorandum of Agreement (MOA) is a “conditional agreement” between two or more parties where the transfer of funds for services are anticipated.
They are both used as written agreements between two parties. There is no established legal difference. The two terms are interchangeable. Because it contains the word “agreement”, and a contract is an agreement, some people believe that an MOA signifies a more significant commitment than an MOU.
An MOU expresses an understanding between two or more parties indicating their intention to work together toward a common goal. It is similar to an SLA in that it defines the responsibilities of each of the parties. However, it is less formal than an SLA and does not include monetary penalties.