Memorandum of Understanding

memorandum-of-understanding-cubed-legal-documents

Memorandum of Understanding 

 
 
 

INTRODUCTION

Sometimes in business you do not want to go “all legal” and “formal” too early. You’ve just built a new relationship with either a trading partner or potential collaboration partner and you’re nowhere near ready to call up ASIC and incorporate your business. In fact the thought hasn’t even crossed your mind. But, as a discerning entrepreneur you want something that outlines your agreement to this point. We get that.  

A way around the expensive formalities of a ‘Heads of Agreement’ or Services Agreement is to agree to a Memorandum of Understanding (MOU).

 

WHAT DOES IT COVER?

A MOU is a non-binding document which sets out the intentions of the parties towards the business moving forward and the expectations outlined and agreed. 

 

WHY IS THIS IMPORTANT?

A MOU has a number of purposes. It can be used in negotiations as a first step towards a formal contract. Or it can be used to govern an informal relationship. It is a way for parties who wish to eventually enter into an agreement to engage without being legally bound in any way. Entering into a MOU is often a good stepping stone into a long term contractual relationship. 


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