A memorandum of understanding (MOU) is a formal document describing the broad outlines of an agreement that two or more parties have reached through negotiations. It is not a legally binding document but signals the intention of all parties to move forward with a contract.
An MOU is an expression of agreement. It indicates that the parties have reached an understanding and are moving forward. Although it is not legally binding, it is a serious declaration that a contract is imminent. [Important: An MOU communicates the mutually accepted expectations of the people, organizations, or governments involved.]
Under U.S. law, an MOU is the same as a letter of intent. In fact, arguably a memorandum of understanding, a memorandum of agreement, and a letter of intent are virtually indistinguishable. All communicate an agreement on a mutually beneficial goal and a desire to see it through to completion.
MOUs communicate the mutually accepted expectations of the people, organizations, or governments involved. They are most often used in international relations because, unlike treaties, they can be produced relatively quickly and in secret.
Not everyone agrees on the benefits of an MOU. During trade talks with a representative of China in Washington in April 2019, President Donald Trump was asked by a reporter how long he expected U.S.-China memorandums of understanding to last. "I don't like MOUs because they don't mean anything," the president replied. After some discussion, it was decided that any document that emerged from the talks would be called a trade agreement, never an MOU.