Legal Question in Business Law in California

Re: Memorandum of Understanding and Memorandum of Agreement

Whether either one of these is enforceable as a contract depends upon its substance, not its label.

A Memorandum of Understanding is more commonly encountered, I believe, and resembles a list of contractual terms (a "term sheet") that the parties have negotiated. It may be, but not necessarily is, incomplete, unsigned (or signed only be the preparing party), and/or may expressly state that it is not enforceable and that a later-prepared formal agreement is needed to bind the parties.

A Memorandum of Agreement, on the other hand, is less frequently encountered, and may overlap the MOU in meaning, but more likely the MOA is a summary of the terms of an actual contractual agreement. So, it is more likely to be final and enforceable, or at least it may be evidence that a contract was formed but not the actual contract itself.

Again, I can't emphasize too strongly that substance is what determines enforcement. A court would always inquire whether the parties expected to be bound by the instrument.

Re: Memorandum of Understanding and Memorandum of Agreement

Mr. Whipple. There is no magic meaning that differentiates a Memorandum of Understanding from a Memorandum of Agreement. Often, a Memorandum of Understanding is non-binding, and a Memorandum of Agreement is binding, but that is not necessarily true, as one can specify within either document whether it is or is not binding.

I hope this is helpful.

Re: Memorandum of Understanding and Memorandum of Agreement

There is no difference. The intent of the parties controls.

Specifically, if the parties intend the agreement (whatever it is labelled) to be binding without any further agreement, it is. If not, then it will not be enforceable.

Let me know if we can be of further assistance.

Re: Memorandum of Understanding and Memorandum of Agreement

You probably do not need another voice on this question, but as long as I've gotten this far, I would like to join the choir. It is the substance of the writing that determines its enforceability, not the title of the document. Here, as well as where you are, I am sure the terms "Contract" and "Agreement" are used interchangeably. "Understanding" and "Agreement" are also interchangeable.