How to write a memorandum of understanding

A memorandum of understanding is a written record of how two or more organisations intend to work together. The Australian Department of Finance defines it as an agreement that sets out the working relationship, expectations and responsibilities between the parties. Writing one well comes down to five sections and one sentence: the purpose, the contributions, the coordination, the term, and a status clause that says which parts bind and which do not.

What an MOU is for, and when it is the wrong document

An MOU suits a collaboration where nobody is buying anything from anybody. Two community organisations sharing a program, a council and a university running a joint study, a charity and a business agreeing to cross promote. Not-for-profit Law describes it as a framework that expresses shared goals and defines the working relationship, and notes that it is usually not legally binding.

That same guidance gives the clearest test for when an MOU is the wrong choice: if your organisation needs to rely on the other side taking certain actions, or stands to lose money if they do not, you need a contract. A supplier relationship, a paid sponsorship or a funding agreement all fail that test. The MOU versus contract page covers the legal distinction; this post covers how to write the document once you know an MOU is right.

There is also a middle ground. A letter of intent to buy a business on this site binds only the paragraphs it lists, among them 45 days of exclusivity and confidentiality, because those are the promises that make the next step safe. An MOU often ends up the same shape: mostly a record, with two or three clauses that genuinely need to hold.

The sections, in order

The memorandum of understanding example on this site records a repair cafe run by an invented library service, Coastline Libraries, and an invented community workshop, Tidewater Men’s Shed. It has ten numbered clauses between a cover and a signature block, and the table below this article lists each one with whether it is intended to bind.

The order is deliberate. Parties first, so every later clause can use short names. Purpose and principles next, because every disagreement later is settled by going back to them. Contributions and coordination in the middle, because they are the working parts people consult month to month. Term and status near the end, then the binding clauses, then disputes and signatures.

A useful rule while drafting: every clause should answer a question a new committee member would ask in their first meeting. What is the program, who pays for what, who decides, how long does it last, and what happens if one side stops.

Purpose and principles: write the shared goal once

The purpose clause in the example is two sentences. It names the activity, the place and the start date: a monthly repair cafe at the Tidewater branch library from February 2027, where volunteers fix household items while the owner watches. That is specific enough that nobody can later claim the MOU covered a weekly event or a second site.

Principles do a different job. They are the four rules that decide the questions the MOU does not answer directly. In the example they are short and numbered: free to the public, safety first, each party keeps its own identity, decisions by consensus. When a visitor asks for a repair that cannot be done safely in a meeting room, principle 2.2 answers it without a meeting.

Keep principles to what you would genuinely use to settle a disagreement. A list of values that nobody would cite in an argument is decoration.

Contributions: a table, not a paragraph

This is the section most MOUs get wrong. A paragraph that says the library will support the program with space and promotion, and the shed will provide skilled volunteers, reads well and settles nothing. The example uses a table instead: six rows, each contribution in its own row, and a Library column and a Shed column marked Yes, No or Shared.

The table forces three decisions a paragraph lets you skip. Who insures the venue, and who insures the tools. Who funds the consumables, and to what amount. Who owns the attendance data. The last row, data marked Shared under both parties, is the one that prevents the most awkward conversation a year later.

If your collaboration has money in it, put the amount in the table. The example’s $1,500 annual consumables budget is the only figure in the document, and it appears twice: once in the contributions table and once in the costs clause that binds. The joint venture agreement example shows what the same contributions idea looks like when it has to be fully enforceable.

Coordination, term and leaving

Coordination says who talks to whom and how often. The example names a group of two people from each organisation, names the two leads, sets a monthly meeting and schedules a review at six months. Named people matter: an MOU that says the parties will meet regularly has no one responsible for calling the meeting.

The term clause should cover three things: how long, how it renews, and how either side leaves. The example runs for 12 months from 1 February 2027, renews by an exchange of letters, and lets either party withdraw on 30 days written notice. Easy exit is a feature. A cautious committee signs more readily when leaving costs nothing but the program itself.

Disputes get the lightest possible process: the coordination group first, then the library manager and the shed president if it is not settled within a month. Anything heavier, like mediation or courts, signals a relationship the parties do not expect to trust.

The status clause: which parts bind

This is the sentence that decides what kind of document you have written. Not-for-profit Law recommends including a specific statement that the MOU is not intended to create legally binding obligations. The better version goes one step further and names the exceptions.

Clause 6 of the example reads, in effect: this MOU records the intentions of the parties and is not legally binding, except clauses 7, 8 and 9, which the parties intend to be binding. Those three clauses are confidentiality, costs, and intellectual property and branding. Each heading also carries the word binding, and a callout under clause 6 repeats the sentence so nobody skims past it.

Why those three? They are the promises that cause real loss if broken. Personal details of volunteers and visitors leaking is a privacy problem regardless of whether the program continues, so confidentiality has to hold. The confidentiality clause page covers wording options, and the post on what to include in an NDA covers the exclusions worth copying. Costs have to hold because one party is spending money. Branding has to hold because each organisation’s name and logo belong to it.

Number the binding clauses in the status clause rather than describing them. A description like the confidentiality and cost provisions invites an argument about what those include. Clause numbers do not.

Common mistakes

• No status clause at all. The document then says nothing about its own effect, and a title alone is a weak signal of what the parties intended.
• Binding by accident. An MOU with a price, a delivery date and a remedy for failure has most of the ingredients of a contract. If you need those, write the contract.
• Contributions as prose. Write them as rows. If a row cannot be filled with a clear Yes or No, the parties have not agreed it yet.
• Nobody named. Name the leads and their roles. People change, so say how a replacement is notified.
• No exit. An MOU that cannot be left is harder to sign and more likely to be read as binding.
• Signed by the wrong person. A program coordinator enthusiastic about the collaboration may not have authority to commit the organisation’s name and budget.

Build it

The document maker for tables is the right starting point, because the contributions table is the part an MOU is built around. Describe the parties, the activity, each contribution and which clauses should bind, and the generator classifies every document before writing it, including whether its structure is flat, numbered or tabular. A letterhead is only used when the document speaks for a sender. A cover is never added under three pages.

Two limits worth knowing. The research step grounds the content but documents never print citations, so add any guidance you relied on yourself. And the AI chat edits text only, so restructure clauses in the builder. The guide to creating a document with AI walks the steps. For signing, a signature block party becomes one signer with a name, email and signing order. If the collaboration later needs enforceable obligations, the partnership agreement example shows how much more a binding document has to say.