Awesome Practical Ways to Draft Memorandum of Understanding: 5 Important Clauses

You may have been engaged after a long and complex negotiation to draft a memorandum of understanding to cover the stages of the negotiation. Or, as a legal writer, you have came across clients who wants you to draft a memorandum of understanding for them and you don't know how to go about it.
How to write a Memorandum of understanding

Memorandum of understanding (MOU) is a document which describes an acceptable agreement reached by two or more parties over a project. Like a formal contractual agreement, memorandum of understanding is not legally binding on the parties and as such it is unenforceable in law. It is more like a documented gentleman agreement.

Now, you will agree with me that it does not have to be in the same format like a formal agreement.

There are really no universal acceptable format for drafting a memorandum of understanding, but there certain clauses you must consider and include in your MOU to make is look more professional.

  Clause (1)  Names of  Parties

Memorandum of understanding is mainly use where the parties are equal in status. Negotiation involving two unequal parties is best represented in a formal agreement such as where an employee signs an employment contract with an employer

The names of the parties should be clearly and correctly written to avoid inputting wrong identity into the memo. It should be headed as follows:

                       Memorandum of Understanding 
The United States Agro Reserve Centre
Raysida Community Services

There need not to be any abbreviation on the names of the parties and every form of short form of writing names should be completely avoided.

Clause (2)  Purpose

Memorandum of Understanding do not have any uniform purpose. Its purpose varies depending on the nature of agreement and its subject matter.

The purpose of a MOU is not an end but a means to an end, therefore, it should be express in that form for clear interpretation. See for instance


       The purpose of this memorandum is to provide a framework for future binding contract between United State Agro Reserve Centre  and Raysida regarding supply of Agro materials to                         commercial farmers

  Clause (3)   Terms And Conditions

Terms and conditions of a MOU are the bond that hold the parties together. They are the key elements of MOU and as such requires great attention.

Terms of memorandum of Understanding are not the same in all respect. They vary depending on the purpose of the memo and sometimes are binding on the parties.

1. United State Agro Reserve Centre shall supply large quantity of farm implements,5000 metric tons of Fertilizers annually to Raysida for onward delivery to farmers in the rural areas.

2. Raysida shall ensure that large percentage of farmers get these fertilizer before the beginning of annual farming season.

3 Raysida shall forward annually comprehensive account of its operation to United State Agro Reserve Centre which shall make recommendations where necessary.

Clause (4)   Warranties

In order to protect the parties, it is important to include a warranty in the MOU.

Like formal contract, there should be provision for unforeseen circumstances that may arise in course of performance of contract.

1. United State Agro Reserve Centre shall be liable for any loss or misfortune that may occur in the course of carrying or transportation of 
Agro materials their product down to the farmers.

2. Raysida shall be liable for all waste and loss that are not accounted for in the course of delivery of the Agro materials to the farmers.

Clause (5)   Non liabilities

Non liability clause is critical part of MOU. It sets out limits beyond which either party will not be held liable in terms of losses and obligations. It is proper to set out non liability clauses in the memo than to leave them for the parties to assume.

United State Agro Reserve Centre will not provide the means of transportation and will not partake in any loss that occur as a result of inefficient transportation.

Raysida shall not be liable for any loss that may be incur by farmers as a result of use or application of the agro materials. It shall only act as a middle man between United State Agro Reserve Centre and Commercial farmers in United state in terms of risk that may arise in course use or application of the Agro materials.

Remember to submit your manuscript to the parties or parties representives to read and make amendments where need be.

Both parties must sign a memorandum of understanding for it to be validly entered