Memorandum Of Understanding Is Not A Binding Contract

Memorandum Of Understanding Is Not A Binding Contract.

DAILY LAW TIPS  by Onyekachi Umah,Esq.  (Tip 201)

Contract is a binding agreement between parties, creating a commitment to do or not to do a particluar thing. Memorandum of Understanding (MOU) is a mere expression of intention by parties, a preliminary understanding of parties to later enter into a formal contract but not on its own a contract and as such not binding and not enforceable by parties.
MOU could come in the form of “Heads of Agreement”, “Letter of Intent”, and “Heads of Terms”. They are not binding agreements but
an expression of intentions subject to certain circumstances. It is also common to find full fledged binding agreements that are ignorantly or mischievously titled  Memorandum of Agreements.
In all situations,  the words and contents of an agreement (as well as conduct of parties) a  what the court must consider in finding the true intentions of parties and the implication of their MOU. To ensure you don’t sign a Contract instead of a mere Memorandum of Understanding, always contact your lawyer.
My authority is the decision of Supreme Court in the case of BPS CONSTRUCTION & ENGINEERING COMPANY LIMITED v. FEDERAL CAPITAL DEVELOPMENT AUTHORITY (2017) LPELR-42516(SC).


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