What is the difference between a MOU and an agreement?

Similar to a contract, a memorandum of understanding is an agreement between two or more parties. Unlike a contract, however, an MOU need not contain legally enforceable promises. While the parties to a contract must intend to create a legally binding agreement, the parties to an MOU may intend otherwise.

Are partnerships and strategic alliances the same?

Strategic alliances (also called “strategic partnerships”) are broad agreements that align the strategic efforts of two or more companies with overlapping products or markets towards a common goal. Likewise, the independence of both parties sets strategic partnerships apart from mergers and acquisitions.

How many types of MoU are there?

A memorandum of understanding (MOU) is defined as an agreement between parties and can be bilateral (two) or multilateral (more than two parties).

Is an MoU legally binding?

A memorandum of understanding is an agreement between two or more parties outlined in a formal document. It is not legally binding but signals the willingness of the parties to move forward with a contract. The MOU can be seen as the starting point for negotiations as it defines the scope and purpose of the talks.

What is strategic alliance and partnership?

A strategic alliance (also see strategic partnership) is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. Strategic alliances occur when two or more organizations join together to pursue mutual benefits.

What is the difference between a strategic alliance and a merger?

Alliance is an approach in which two or more companies agree to pool their resources together to form a combined force in the marketplace. Unlike a merger, an alliance does not involve the emergence of a new combined entity. Therefore joint ventures are indeed a very common entry strategy for companies.

Is MoU legally binding?

Although MOUs are not legally binding but are considered as a serious document by the law. To enforce it, the agreement must contain binding and non-binding terms in order to be enforceable and if the agreement is to be a non-binding then, it has to be specified clearly as a non-binding agreement.