- published: 14 May 2010
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A memorandum of understanding (MoU) is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen's agreement.
In some cases depending on the exact wording, MoUs can have the binding power of a contract; as a matter of law, contracts do not need to be labeled as such to be legally binding.[citation needed] Whether or not a document constitutes a binding contract depends only on the presence or absence of well-defined legal elements in the text proper of the document (the so-called "four corners"). This can include express disclaimers of legal effect, or failure of the MoU to fulfill the elements required for a valid contract (such as lack of consideration in common law jurisdictions).
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