Memorandum of Understanding explained

ALAN PEAT
POLITICAL AND business deals often carry the phrase “memorandum of understanding (MOU)” when talking about the stage the possible agreement has reached. But one of our readers has just asked FTW the interesting question: “What exactly is a memorandum of understanding, and what legal hold does it have?” So we put this to one of the country’s well known personalities in the forwarding industry, Philip Womersley, chairman of Safcor Panalpina. “It can best be described as a record of intent,” he said, “covering the principal points of an agreement in simple language, without any legal complexities . “A plain record of an understanding between two parties which would normally lead to an attorney being briefed to put it together in a fully legal agreement which will then be signed by the parties.” Legal hold And what legal hold does it have? “I suppose you’re asking if you can be sued under an MOU,” said Womersley. “Well, technically, yes you can. But what would happen would depend how far down the process the party or parties have gone, and how they have begun to act in accordance with the points in the agreement.” That’s the story in commercial terms, but it differs slightly when it’s used about political agreements. Here it bears the same basic definition – being a record of intent in simple language. But it probably doesn’t have the same legal hold, according to Womersley, as it is seldom drawn up by legally contractual parties.