Breaking Down a Memorandum of Understanding.
This is Not Legal Advice. Nor does this form any Legal Relationship with Mike Rekola. The issue we are breaking down today is the Memorandum of Understanding.
FYI— This is Not Legal Advice. Nor does this form any Legal Relationship with Mike Rekola.
One Quick Thought:
The issue we are focusing on today is the Memorandum of Understanding.
A Memorandum of Understanding (“MOU”) is an initial agreement between two or more parties outlined in a formalized document.1 An MOU is not legally binding but signals usually one or two things— the parties are aligned to proceed in a certain direction, and if required are ready to move forward with a formal contract (if so desired).
An MOU is an amazing starting point for any business scenario. Think of it as a blank document where parties, who intend to come together, outline their desires and needs, from the impending relationship. The use case for creatives can be unique and varied. Some of the most common approaches are between writing partners, production teams, co-creators, and more. For example, writing partners might use an MOU to outline— ownership of the material (i.e. the rights), the process of writing, and what the desired business outcome is (i.e. sell it, make it, who gets paid what, etc).
Whether I am bringing people into one of my projects or I’m joining an already established team an MOU is essential BEFORE commencing the relationship. It’s only fair for everyone to have the ideas, roles, rights, and more all clearly defined in black ink. Again, MOUs are not legally enforceable but they do provide clarity and act as a canary in a coal mine if any party is deviating from the proposal.
Now, let’s break down a typical MOU. The basic elements of an MOU include:
The Parties - This is straightforward. This is the who. I.e Who is joining the MOU and will work in furtherance of the endeavor.
The Obligations of the Parties - This is an affirmative section, where each party lists out their respective roles in the endeavor. Where it is spelled out who has to do what and when.
The Term / Length of Cooperation - This sets out the timeline for the length of the cooperation.
Any Financial Terms - Again, self-explanatory, but if you intend monies to be exchanged financial terms are necessary, saying who gets paid, when and how.
Any Restrictions - This sets out any limitations on the parties— for example, a writer might agree to a restriction on writing a different Monster Movie during the same time if the current project for the MOU is for a Monster flick.
Governance and Dispute Resolution - This is a process section, where the decision-making provisions end up. Namely, the process for making those decisions— will they be a majority vote, one-party rule, or something else.
Termination Clause - This is a process section. Just as important as the start is to any endeavor, it’s equally important to know how to disband it. This is the section that dictates how the Parties intend to wrap up the MOU when the time comes.
Any Notices - This is a process section that dictates how each party intends to keep the other informed.
Any Supporting Attachments or Appenxicies - Finally this is an information section, where important and relevant additional documents may be included in the MOU.
If you are looking for a real MOU to study for educational purposes only download a copy of one of mine— click on the button above. You will be redirected to Gumroad for a free download! FYI— This is Not Legal Advice. Nor does this form any Legal Relationship with Mike Rekola.
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Sourced on 2022/5/3: https://www.investopedia.com/terms/m/mou.asp