Memoranda of understanding are not enforceable contracts because no offers are presented and no transactions are made. This could be a drawback for partners who have already cemented the details of the transaction and are ready to legally commit.
But for many, it is exactly because they are a step down from a formal contract that MOUs are so useful. An MOU is also one step up from the informal, unwritten “gentlemen’s agreement.” If casual, verbal comments are the most concrete artifacts you have of your potential partnership, a solid next step might be to elevate your conversations with an MOU.
That way you can establish a paper trail and keep negotiations moving forward. Each party has the opportunity to review the terms of the agreement, resolve any disputes or miscommunications, and make changes to the agreement before signing on the dotted line.