This language is typically sufficient where the information being shared, while not intended to be made public, would not cause any real harm or damage to any of the parties if it were to become public. Many MOUs contain simple statements that the parties agree not to disclose any confidential information that they receive during the activities covered by the MOU. In some cases the discussions that are intended to flow from a MOU will involve the confidential information of one or more parties. If an MOU does contain these sorts of commitments it becomes a contract, at least in relation to those specific commitments, and will have to comply with applicable University policies as noted above. The issue of confidentiality will be addressed specifically below, but any commitments that are intended to be binding and enforceable should be addressed in separate, legally binding agreements.
An MOU should not contain any specific commitments, be it related spending any money, use of resources, providing indemnification, sharing of intellectual property or confidentiality. The MOU should contain a statement that the parties may, but are not obligated to, incur any costs or expend any resources in relation to the MOU. It should clearly state that the MOU is not intended to be legally binding and that any specific projects or initiatives that result from the discussions facilitated will be outlined in separate, legally binding agreements. They usually contain forward-looking language that contemplates discussions between the parties that they hope will lead to an initiative (or initiatives) that can be documented in a formal contract. As such it should be written in a way that conveys to someone reading it that the parties have decided to work together towards a common goal but are not yet ready (or do not plan) to enter into a formal contract respecting that goal. MOUs generally serve as a roadmap for the parties involved.
What should (and should not) be included in an MOU
that will be subject to a formal, legally binding contract. It is usually with the intention of eventually reaching an agreement on a project, collaboration, etc. Its purpose is to outline the intended goals of the parties, typically in very broad language. In this respect MOUs are very similar (if not identical in many cases) to a Letter of Intent (LOI). The parties may not yet be ready to enter into a formal contract or they may just want to coordinate certain activities without taking on any responsibilities to the other party or parties. If a MOU isn’t a contract, then what is it? The purpose of a ‘true’ MOU is to allow parties to create some formality around their relationship without incurring any legally binding commitments. Instead each party has provided something to the other party that it (the other party) considers valuable. A NDA is a legally enforceable contract despite no money changing hands. A good example of this is a mutual non-disclosure agreement (NDA) where both parties agree to exchange confidential information and to not disclose the confidential information of the other party without permission. As long as the promises being exchanged are considered valuable to the parties involved, a contract is formed. A promise to do (or not do) something in exchange for another party doing (or not doing) something can be a contract as long as the promises of each party are sufficiently clear. It should be noted that it is not necessary for money to be exchanged for a contract to be formed. If a document called a MOU contains legally binding commitments then it is a contract and should be treated as a such.
The reality is that a documents status as a ‘contract’ doesn’t depend on what you call it, but rather what it contains. It is thought that if something is called an MOU then it isn’t a contract and doesn’t have to follow the normal contracting processes (including, but not limited to, procurement policies and the Signing Authority Policy, which governs who may sign a contract on behalf of the University). It is often looked at as a way of documenting an agreement between the university and another party ‘without a contract’. The role of Memorandums of Understanding (MOUs) in the university’s relationships with outside parties is often misunderstood.
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