government-contracts
Meaning of a Memorandum of Understanding
<p>I recently watched a video of a controversial head-of-state expressing his views on MOU's in the context of international trade.   It seems the view expressed boils down to "An MOU is not a contract/binding agreement".</p>

<p>A senior negotiator responded asserting that an MOU IS an actual contract.  Commentators poked fun at the head-of-state "not knowing that an MOU is an agreement".</p>

<p>My belief loosely mirrored those expressed of the head-of-state's - ie that an MOU is more of a "guidance document" from which contracts/agreements follow.  I expect a court might consider it as part of a understanding larger picture of an unclear agreement, but that an MOU is  not a reliable legal document, often falling short of an agreement and are not binding to anything like the same extent that a contract is.    </p>

<p>(To the extent anyone may be aware of the specific MOU controversy  in question, I do not believe that an MOU is meaningless, rather that it is an imprecise document with very limited enforce-ability. I do accept that the contents of the MOU make all the difference and some may be more enforceable then others depending the extent to which they contain all the elements of a contract) </p>

<p>So 2 questions - </p>

<ol>
<li><p>Does an MOU have a different meaning/status/relevance in trade agreements to a typical MOU (a view expounded by some detractors of the head of state)?</p></li>
<li><p>Is my understanding of an MOU flawed ?   Is an MOU on trade equivalent to a Trade Agreement?</p></li>
</ol>

<p>A contract is a legally binding agreement governing a commercial relationship under national law.</p>

<p>A treaty is a legally binding agreement between nation states once ratified and given effect under each nations local law.</p>

<p>MOU are agreements that are not legally binding. That doesn’t mean there aren’t consequences for breaking them - just not legally enforceable ones.</p>
