ESTABLISHING INSTITUTIONAL MEMORANDA OF UNDERSTANDING (MoUs)

Introduction

A memorandum of understanding is a bilateral agreement between two or more parties, outlined

in a formal document. It is not legally binding but signals the willingness of the parties to move
forward with a contract.

An institutional memorandum of understanding is therefore a bilateral agreement between two or

more institutions. The memorandum of understanding can be seen as the starting point for
negotiations as it defines the scope and purpose of the agreements between the concerned
institutions. A MoU between institutions indicates that the institutions have reached an
understanding and are moving forward. MoUs communicate mutually accepted expectations of
all the parties or institutions involved in a negotiation. Although not legally binding, it is a
serious declaration that a contract is eminent.

Content of MoUs between institutions

A memorandum of understanding between institutions clearly outlines specific points of

understanding between the institutions. It names the institutions, describes the agreement, defines
its scope and details each institution’s roles and responsibilities. To establish an MoU, the
institutions involved need to reach a mutual understanding. In this process, each institution learns
what is most important to the other party or parties before moving forward. MoUs must contain
but are not limited to:

 A listing of all institutions involved

 Purpose of the MoU
 Terms and conditions of the MoU
 Duration of the agreement
 Any payment terms or special provisions where applicable
 Appropriate bilateral signatures

Advantages and disadvantages of institutional MoUs

An institutional MoU allows all institutions involved to clearly state all of their objectives and
goals. This makes for less uncertainty and prevents future unexpected disputes from occurring.
Furthermore, by clearly laying out what each institution expects of the other, an MoU provides a
blueprint for any contract both institutions may or may not wish to draw up in the future.

Just like any MoU, the major drawback of an institutional MoU is that it is not legally binding.
While in some cases this may be a benefit since neither institutions are required to do what they
say in the MoU, they can simply walk away or change their expectations. MoUs can take
significant time and planning to create and if one party completely changes their requirements,
then creating the MoU would have been a big waste of time.