How is an MOU different from a Letter of Intent (LOI)?

They're largely synonymous. "MOU" implies mutual intent; "LOI" usually comes from one party to another. In M&A, "term sheet" is the same idea. Use whichever name your industry uses.

Should I have a lawyer review it?

For most low-stakes MOUs, no — the template is enough. For deals expected to result in $250K+ commitments, paying a lawyer 1-2 hours to review is cheap insurance against ambiguous binding language.

Memorandum of Understanding (MOU)

Non-binding outline of an intended agreement between parties — captures alignment before formal contract.

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MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding ("MOU") is entered into as of May 4, 2026 between:

  Acme Corp., of 123 Main St, San Francisco, CA 94103; and
  Beta LLC, of 456 Oak Ave, Austin, TX 78701

(each a "Party" and collectively, the "Parties").

1. PURPOSE
The Parties wish to explore a joint go-to-market partnership combining Acme's enterprise sales channel with Beta's SMB product offering.

2. PRINCIPLES OF COOPERATION
The Parties intend to operate under the following principles:

1. Acme will introduce Beta to qualified enterprise prospects.
2. Beta will deliver a co-branded onboarding experience for joint customers.
3. Revenue from joint deals will be split 60/40 (Acme/Beta) to reflect Acme's sales role.
4. Either party may terminate this collaboration on 30 days' written notice.

3. NON-BINDING NATURE
This MOU expresses the Parties' shared understanding and intention to negotiate in good faith. Except for Sections 4 (Confidentiality) and 6 (Governing Law), THIS MOU IS NOT LEGALLY BINDING and does not create any enforceable obligation, contractual right, or financial commitment. Either Party may terminate discussions at any time without liability.

4. CONFIDENTIALITY
Each Party shall hold in confidence any non-public information shared by the other in the course of these discussions, for a period of two years from the date of disclosure. This obligation survives termination of this MOU.

5. NEXT STEPS
The Parties intend to negotiate and, if alignment is reached, execute a definitive written agreement on or before [target date to be determined]. The terms of any such definitive agreement shall supersede this MOU.

6. GOVERNING LAW
This MOU is governed by the laws of the State of California.

7. ENTIRE UNDERSTANDING
This MOU is the complete statement of the Parties' present understanding and supersedes all prior discussions on its subject.

ACKNOWLEDGED AND AGREED:

ACME CORP.                              BETA LLC

By: _____________________________     By: _____________________________
Name: Acme Corp.               Name: Beta LLC
Title: ___________________________     Title: ___________________________
Date: ____________________________     Date: ____________________________

About this template

An MOU sits between a handshake and a contract — it captures what the parties have agreed to in principle, without creating legal obligations to perform. Used correctly, it lets you align on the big things (purpose, who does what, rough economics) before spending lawyers' time on a definitive agreement. Used badly, it creates exactly the kind of "we had a deal" disputes you were trying to avoid. The single most important paragraph is Section 3 (Non-Binding Nature) — without it, courts in some jurisdictions will treat the document as an enforceable contract. Confidentiality and governing-law provisions usually ARE binding even in a non-binding MOU. The "target date for definitive agreement" creates useful urgency; without it, MOUs tend to drift indefinitely and one party loses interest.

When to use it

Two parties exploring a joint venture, partnership, or major commercial deal.
Before drafting a complex contract — capture alignment cheaply first.
Government and non-profit collaborations where formal contracts may take months.
M&A discussions ("term sheet" is essentially an MOU for an acquisition).

What to include

Clear statement of purpose / shared goal.
Principles of cooperation — who does what.
Explicit non-binding clause (most important).
Confidentiality obligations (these CAN be binding).
Target date for definitive agreement.
Governing law.

Frequently asked

In most cases no — provided it includes a clear non-binding clause. Some jurisdictions still enforce MOUs that look like contracts (specific obligations, consideration), so the explicit non-binding language matters.

⚠ Legal disclaimer. This template is provided for informational purposes only and is not a substitute for legal advice from a qualified attorney. Always consult a licensed professional before using this document for any binding agreement.