❓What is a memorandum of understanding?

A memorandum of understanding (MOU) is a non-binding document that outlines the shared intent between two or more parties. It’s often used when you’re initiating a partnership, planning a project, or outlining preliminary responsibilities, without yet committing to a formal contract. An MOU helps everyone understand the scope of work, general roles, and key milestones before negotiations are finalized.

Because it’s not legally enforceable, an MOU gives you flexibility. You can clarify expectations early, reduce misunderstandings, and create a strong foundation for future agreements. This makes it ideal for pilot programs, informal partnerships, or joint ventures where you’re still defining deliverables or ironing out the details. While it won’t hold up in court like a contract, it still builds accountability and can ease the transition into a more formal agreement down the road.

❓How is an MOU different from a contract?

The primary difference lies in enforceability. A contract is a legally binding agreement, if one party breaches the terms, the other can take legal action. An MOU, on the other hand, is more of a mutual handshake in writing. It defines the spirit of collaboration without carrying legal weight.

While both documents may include similar information, such as responsibilities, timelines, and project goals, a contract goes further. Contracts typically include specific remedies, payment terms, and termination clauses. If your agreement involves risk, financial transactions, or specific deliverables, a contract provides the necessary protection. If you're still in the exploratory phase or building trust with a new partner, an MOU might be more appropriate.

❓When should you use a memorandum of understanding?

An MOU is useful when you need to document the broad strokes of an agreement without committing to binding terms. Consider using one when:

• You’re building a relationship with a new partner or stakeholder

• You want to outline responsibilities while still negotiating final terms

• The collaboration is short-term, informal, or low-risk

• You’re launching a joint project that’s still in development

• You need to demonstrate alignment internally or with funders

Using an MOU gives everyone a shared understanding of roles and expectations. It creates alignment, encourages accountability, and helps avoid early miscommunications, even if no legal action can be taken later.

❓When should you use a contract instead?

Use a contract when your agreement involves obligations you want legally enforced. Contracts are essential when:

• Money is being exchanged for goods or services

• Project scope, timelines, or deliverables are well-defined

• You need clear consequences for non-performance

• Intellectual property, confidentiality, or liability is involved

• You’re working across jurisdictions with different legal standards

A well-drafted contract protects both sides by formalizing commitments, laying out remedies, and preventing disputes. If your project has legal, financial, or operational risk, a contract ensures everyone is held to the same standards and expectations.

❓What should an MOU include?

Even if it’s not binding, an MOU should still be clear and well-structured. You should include:

• The names and roles of all parties

• A summary of the collaboration’s purpose

• Key responsibilities and contributions

• Important dates or deadlines

• Scope of work or project phases

• Any confidentiality or IP language

• Signatures and the date the MOU takes effect

By documenting these elements, you ensure the MOU serves as a helpful record of intent. It becomes a guiding document that builds trust and offers a smooth path to a contract if needed later.

❓What should a contract include?

A contract should include detailed, enforceable terms that clearly define expectations and remedies. Most contracts include:

• Full names and addresses of all parties involved

• Scope of work or deliverables

• Timeline and payment terms

• Clauses covering confidentiality, termination, and liability

• Signatures from authorized parties

• Effective date and duration

Including these elements protects your business, reduces misunderstandings, and ensures you can take action if something goes wrong. Contracts are also easier to manage when created and tracked using contract lifecycle tools like ROGER.

❓Does an MOU still need to be signed?

Yes, even though it’s not a legally binding document, you should still sign your MOU. A signature shows that each party agrees with what’s written and intends to follow through. It adds weight to the document and can help resolve future misunderstandings.

At the very least, signatures confirm that all parties reviewed and acknowledged the terms. If you're working with external collaborators, a signed MOU gives your internal team something to reference until a contract is in place.

❓How can ROGER help you manage MOUs and contracts?

ROGER makes it easy to create, sign, and manage both MOUs and contracts in one place. You can:

• Use templates to save time and standardize recurring agreements

• Assign roles and automate workflows to reduce bottlenecks

• Send for eSignature and track status in real-time

• Store signed documents securely, with audit trails included

Whether you're finalizing a contract or just starting out with an MOU, ROGER helps you stay organized, compliant, and fast-moving, all from one dashboard.

Want to turn your MOU into a contract when you're ready? Try ROGER for free and see how simple contract management can be.

See what else we're writing about on the ROGER Blog