Memorandum of Agreement (MOA) Template

What is a Memorandum of Agreement?

A memorandum of agreement is a document that forms a legal relationship between two parties working towards a shared goal. When it comes to research agreements at a college, university, or in fact any new partnership agreement, the memorandum of agreement, or MOA, forms some of the most important aspects of the process. MOAs allow research and collaboration to progress and benefit not just the researchers or collaborators, but their institutions and the public at large.

These documents outline the scope of projects and the rights available with them, and help to encourage business with industry partners as well as establishing ongoing partnerships with these external producers.

Overview of a Memorandum of Agreement

The purpose of a Memorandum of Agreement is to place, in writing, the relationship between any two parties who intend to work on a project or towards an objective. The MOA is a legally binding document, and it outlines the details and responsibilities of the partnership.

The MOA vs. The Contract

While the MOA is a formal document that is legally binding, more formal than simply agreeing verbally, it is not as formal as a contract. In fact, often an MOAoutlines an agreement before the drafting of a formal contract.

Essentially, it establishes a relationship that may become more formalized after negotiations are undertaken and both sides do their due diligence. Many organizations use MOAs to outline and set up agreements for collaboration, partnerships, service agreements, or the use of training or technical assistance. Money does not need to be exchanged as part of an MOA.

Contracts, however, are much more detailed and specific in the terms they outline. They give you a much more formalized agreement that is far more solid in terms of expectations and assignment of responsibility and delivery. Usually, an MOA comes first, followed by a contractbuilt from the MOA.

While an MOA is great for defining a relationship, a contract should be used when money comes into play, or there is a defined exchange of goods and services. This is important. The qualifying factor in a contract is anything that involves a value exchange. You give something valuable to your partnerand get something of equal value in return, and these values are specified. Contracts hammer home the importance of an agreement. They establish a legal obligation to meet agreed-upon terms. They also remove any gray areas or leeway from the agreement.

Why Use an MOA?

MOAs can be essential to get new partnerships up and running. They help solidify deals with suppliers, grab new recruits, and act as a precursor to a formal contract. Whenever you or your business isentering into a collaboration, transaction, partnership, employment agreement, or other business relationship, an MOAprovides a solid understanding of where you intend to take the relationship while you finalize the agreement.

It's easy to think of the MOA as a sort of placeholder agreement, and in many ways that's true. It serves to get the ball rolling while you solidify the terms of your new relationship. However, it is a legal document and binding if need be. The purpose of the MOA is to establish the goals, outcomes, and milestones you hope to achieve with your new partnership.

MOAs are used for everything from pre-employment agreements to buying a home to major research and development projects in industry and academia, even for contractors working on home improvement projects.

When Is an MOA a Contract?

There are certain situations wherean MOA is treated as a contract under the law. These include circumstances where MOAs deal with the exchange of money, where someone suffers a loss because the other party failed to live up to their terms, or when a customary exchange exists regardless of the contract.

Reading These Documents

When reading a contract or MOA it's important to be detail oriented in your approach. Every word has meaning. Read the document through several times before signing anything. If something seems to be written in "legalese," slow down and read it over carefully. You may find that it's not so hard to understand after all. Never be afraid to ask for detailed clarification. Always beware of "hand-waving" explanations.

Get familiar with the standard wording you see in contracts. Know who the contractor is. Understand the terms used for the exchange of goods and services. Before you sign, make sure that you are okay with everything in there. This applies especially to contracts. Changing a contract after it's been signed is a very tricky prospect. Resolve any disputes before you put your name on the page.

Make sure everything in the contract or MOA is reasonable, reflects your expectations and verbal agreements, covers all the bases, and can be done. Make sure that neither you nor the other party is agreeing to something they can't deliver, or that could damage their organization.

Contents of Contracts

The elements of a contract are largely the same across the board, though the arrangement, outlining and phrasing may be different. They will always explain:

• The parties in agreement, and their roles, using legal names

• Detailed and specific outline of the arrangement, including scope of services, target audience, delivery expectations, and time limit (if any) on the agreement

• Payment details, or details of services and obligations of each party

• Evaluation of performance and delivery

• Consequences for failing to live up to expectations

• Conditions for ending or canceling the contract (if any)

• Conditions for changing the contract

• Signatures, date, and any financial information (tax ID, social security numbers, etc.)

Structure of a Memorandum of Agreement

A Memorandum of Agreement is structured similarly to a contract but has a different focus. The elements of an MOA include:

• Introduction, which outlines the agreement and partnership purpose, and a statement of authority

• The parties in agreement, using legal names

• Goals of the partnership

• Collaboration areas

• Detailed breakdown of the expectations and roles of each partner

• Any applicable payments or exchange of funds

• Agreement scope and duration

• Use of any involved or resulting intellectual property by each party

• Conditions for changing or terminating the agreement

• Restrictions on joint ventures

• Signatures

Memorandum of Agreement vs. Memorandum of Understanding

Many people become confused by the difference between an MOA and a Memorandum of Understanding, or MOU. While similar, these are not the same thing, and using the wrong one can create major legal complications in your efforts.

An MOU is a simple understanding between two parties with no transfer of goods, services, or funds. It serves only to outline the common goals of different partiesand does not outline obligations. It outlines an offer, consideration, and intentions involved in a newly established relationship. MOUs are properly used to work out how a program should work or how two agencies support each other's operations.

Here's the important thing. MOUs are far less binding in a legal sense and may be unenforceable unless the terms are integrated into a later MOA or contract. Each state has its own laws regulating such agreements. In general, an MOU is far less formal than an MOA. It can be problematic to try and pursue legal action based on an MOU. That being said, the MOU does serve as a sort of "handshake agreement," and the parties involved can be held liable if they fail to deliver and that failure causes harm to their partners.

The MOU is generally an informal precursor to the MOA, just as an MOA is a formal precursor to a contract. Because it is so informal, it's always better to further formalize agreements to protect everyone involved. Most MOUs should include language indicating that they are not obligating financial strictures or funding considerations.

Tips to Keep in Mind When Writing an MOA

When writing an MOA there are certain best practices you want to keep in mind and follow. When you are establishing the terms of any agreement, only use a single MOA. Multiple Memoranda of Understanding can create confusion. Keep your language clear, concise, and as simple as possible. When you can, use the same language you used in discussions.

Your MOA should always focus on balance. Deal with what both parties agree toas the core. Then break it down to each party's agreed-upon terms. Then bring it back to both parties being in agreement. Keep your agreement positive. Talk about what will be donerather than what won't. Make sure that all expectations are realistic and that all parties are capable of delivering.

Make sure that everyone involved is in complete agreement with all the terms, as intended. Sit down with the partners and read the MOA aloud so that everyone can hear potential problems or inconsistencies. Make sure that everyone's signature is on the document and that all parties have a copy of the signed document.

Though less formal than a contract, an MOA is an important step in establishing a formal partnership between two or more parties. It never hurts when drafting documents like this to have the right legal help to avoid traps and costly mistakes. The experienced attorneys you can find through Upcounsel can be of help in this area.

Whether it's an agreement or a formal contract, if you're new to businesses and partnerships, or just need some outstanding advice on your next agreement, login to UpCounsel today and see what we can do for your business partnership's legal needs.