What is a memorandum of understanding
A Memorandum of Understanding (MOU) is a non-binding agreement between two or more parties which outlines the terms of understanding between said parties. It establishes the roles and responsibilities to be carried out by each party and is often the first step towards a formal contract.

Even though an MOU is not binding, many people enter into an MOU before entering into a formal contract as it establishes intent and sets a tone towards future dealings and transactions. MOUs differ in length and complexity depending upon the nature of understanding between the parties and the nature of the transaction. For example, the cultural committees of two colleges may enter into a simple, one-page MOU which states that each college will send a contingent to participate in the cultural events of the other college to increase participation as a mutual benefit. However, an MOU between two countries regarding a trade policy is much more complex in nature and contains detailed terms outlining the roles and responsibilities on the part of each country.

Advantages of entering into a memorandum of understanding
Entering into a memorandum of understanding before a formal contract has many advantages:

It sets the tone for future dealings: Negotiating the terms of a contract is a lengthy and a tedious process. The parties may lose sight of their original intent during the course of fine-tuning each and every term for the contract. However, they can always refer back to the memorandum of understanding to remind themselves of the tone that they had set for the said transaction.
It conveys seriousness: Even though an MOU is not as formal as a legally binding contract, it is more formal than a gentlemen’s agreement and it holds a certain level of seriousness and mutual respect.

It helps in maintaining confidentiality: In case of a diplomatic agreement between two or more countries, unlike treaties, a memorandum of understanding can be kept confidential. Moreover, they are easier to ratify as compared to a treaty.

In Public International Law: to maintain confidentiality and for easier implementation
In international law, memorandums of understanding are placed within the broad category of treaties. For this reason, they do need to be registered in the UN treaties collection to avoid secret diplomacy; however, they may be kept confidential. Confidentiality is one of the reasons, a country may want to enter into an MOU rather than a contract or any other form of a treaty.

Many countries also enter into memorandums of understanding as they are much easier to implement and may be put into effect without legislative approval.

For example, in a program introduced by the United Nations, named the Oil For Food Programme, the government of Iraq entered into a memorandum of understanding with the United Nations to sell oil at market price in exchange for food for the people of Iraq.[ii] Given the political situation in Iraq, it was easier for the government of Iraq and the United Nations to enter into an MOU. As a result of this MOU, the people of Iraq were finally able to eat food. About 60% of the population of Iraq depended on the food that was distributed to them as a result of this deal.

Conclusion
To conclude, a memorandum of understanding is a non-binding agreement (with exceptions) between two or more parties and is usually the first step in the initiation of a formal contract. Any individual, entity or country can enter into a memorandum of understanding if they are within the legal capacity to enter into a contract. However, they should enter into one only if they want to express their intentions to the opposite party, understand the intention of the opposite party or initiate a partnership without creating any legal obligations. in international law, countries enter into an MOU if they want to maintain confidentiality or if they want to a quick and easy implementation of the said understanding. Most of the reasons to enter into an MOU fall within the above-mentioned broad categories.

Aishwarya Says:

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