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A memorandum of understanding (MoU) describes a bilateral or multilateral agreement between two or more 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.
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”). The required elements are: offer and acceptance, consideration, and the intention to be legally bound (animus contrahendi). In the U.S., the specifics can differ slightly depending on whether the contract is for goods (falls under the Uniform Commercial Code [UCC]) or services (falls under the common law of the state).
In private U.S. law, MoU is a common synonym for a letter of intent. One example is the MoU between Bush and Kerry for the 2004 debates iii.
Many companies and government agencies use MoUs to define a relationship between departments, agencies or closely held companies. In the United Kingdom, such an MoU is often called a concordat. An example is the 2004 Concordat between bodies inspecting, regulating and auditing health or social care. The term is often used in the context of devolution, for example the 1999 concordat between the central Department for Environment, Food and Rural Affairs and the Scottish Environment Directorate.
In international relations, MoUs fall under the broad category of treaties and should be registered in the United Nations treaty collection. In practice and in spite of the United Nations’ Legal Section’s insistence that registration be done to avoid ‘secret diplomacy’, MoUs are sometimes kept confidential. As a matter of law, the title of MoU does not necessarily mean the document is binding or not binding under international law. To determine whether a particular MoU is meant to be a legally binding document (i.e. a treaty), one needs to examine the parties’ intent as well as the signatories’ position (e.g. Minister of Foreign Affairs vs. Minister of Environment). A careful analysis of the wording will also clarify the exact nature of the document. The International Court of Justice has provided some insight into the determination of the legal status of a document in the landmark case of Qatar v. Bahrain, 1 July 1994.
One advantage of MoUs over more formal instruments is that, because obligations under international law may be avoided, they can be put into effect in most countries without requiring parliamentary approval. Hence, MoUs are often used to modify and adapt existing treaties, in which case these MoUs have factual treaty status. The decision concerning ratification, however, is determined by the parties' internal law and depends to a large degree on the subject agreed upon. MoUs that are kept confidential (i.e. not registered with the UN) cannot be enforced before any UN organ, and it may be concluded that no obligations under international law have been created. As was obvious in Qatar v. Bahrain, disputes may arise concerning the status of the document once one of the parties seeks to enforce its provisions.