What is a Memorandum of Understanding?

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A Memorandum of Understanding, or MOU as it is commonly called, is a document signed between two or more parties that is intended to memorialize their shared agreement to pursue a certain goal.  MOU vary in formality and can be very similar to formal contracts or simply a casual written summary of an oral agreement.

MOU are important in the business world because they play a key role in smoothing negotiations for big business deals.  As parties negotiate through a large transaction they may come to agree on certain aspects before sorting out the smaller details.  Signing an MOU regarding the overall goal of the negotiation can keep the parties on track and sincere in their negotiation until a final formal contract can be signed.

The MOU can also include strict confidentiality or non-disclosure clauses that will prevent the content of the negotiation from being leaked.  This can be especially important when two parties from different countries or cultures are negotiating as it serves as a basis for trust between the parties.

If you have any questions about contracting in Japan, please contact our office to set up a legal consultation.