Introduction

A memorandum of understanding (MoU) is a formal agreement between two or more parties. It is a flexible tool that sets out the expectations, objectives, and terms of reference for an activity or a set of activities. It is not usually legally binding, but aims to help stakeholders to achieve a common understanding of a partnership. In some cases, it enables stakeholders to move confidently forward into an enforceable contract.

Background

Historically, MoUs were initially used to establish a framework for cooperation and understanding between two countries without creating a legally binding treaty.

After World War II nations sought more flexible and informal ways to engage in diplomatic relations and collaborations. MoUs provided a means for countries to express their intentions and agreements without the legal obligations associated with formal treaties. During the Cold War period MoUs were used as a tool to share goals, interests, and broad areas where there could be collaboration.

Now MoUs are used by a wide range of businesses and organisations. For example, an organisation I was associated with signed an MoU with a government training Institute. We were a Knowledge Partner, and the MoU clearly defined our shared objectives, as well as the activities that we would undertake over a period of three years. The objectives in the MoU included:

• Recruit and train appropriate staff
• Review and redesign training processes, pedagogy, and training materials
• Optimise use of research data

Based on these objectives a document was developed with clear activities, defined timelines and responsibilities, and expected outputs. This document acted as a ‘Go To’ reference for both parties. For our organisation the MoU helped us to plan activities, distribute work among staff/teams, keep track of activities and objectives, and submit accurate and timely invoices. For the client it helped them to track deliverables and manage payments against them. The MoU proved to be an effective communication tool as both partners were involved in and agreed to the clearly defined activities.

The MoU works as a communication tool as it:

• Clarifies objectives – ensures that there is a common understanding of the activities and their purpose.
• Sets expectations and responsibilities – which ensures that there is no misunderstanding, and gives a clear understanding of who does what and why.
• Establishes a framework for a collaborative approach to understanding communication channels, decision-making avenues, and other aspects to ensure the completion of a project.
• Provides timelines and a list of activities to manage expectations on the duration and specific milestones or deadlines.

Most importantly, an MoU serves as a written record of terms agreed by respective stakeholders. It enhances transparency and ensures that everyone is in agreement.

In some cases, an MoU serves as a preliminary step before the parties enter into a legally binding contract. It can be a testing board, and helps build trust and clarify expectations before committing to a more formal arrangement. It acts as a reference document for all stakeholders involved.

Benefits

• Allows all stakeholders to articulate their goals and expectations clearly
• Clearly records responsibilities and expectations

Disadvantages

• Not legally binding, so stakeholders could back out
• If not taken seriously and planned well, could waste of time and resources

Conclusion

An MoU can be amended to reflect modifications and also ensure that all parties are on the same page and are aware of any adjustments.

In a nutshell, an MoU can be a versatile communication tool, providing a structured and formalised way for stakeholders to communicate intentions, expectations, and commitments in a collaborative effort.