What is the Difference Between LOI and MOU?

The main difference between a Letter of Intent (LOI) and a Memorandum of Understanding (MOU) lies in their binding nature and the stage of agreement they represent.

• Letter of Intent (LOI): A LOI is a document that declares the preliminary commitment of one party to do business with another. It is often used in mergers and acquisitions and records the preliminary terms of an agreement. However, a LOI is not binding and serves as a basis for further negotiations between the parties involved.
• Memorandum of Understanding (MOU): An MOU is a document that describes the broad outlines of an agreement between two or more parties. Unlike a LOI, an MOU is considered binding and carries weight in a court of law. MOUs are often used in international relations and when major contracts are in the planning stages. They outline the mutually accepted expectations of the parties involved, including responsibilities, resources, and benefits.

In summary:

• A LOI is a non-binding document that outlines the intentions of parties to enter into a business agreement.
• An MOU is a binding document that outlines the key terms and conditions of an agreement between parties.

Comparative Table: LOI vs MOU

The main difference between a Letter of Intent (LOI) and a Memorandum of Understanding (MOU) lies in their purpose and binding nature. Here is a table summarizing the differences between the two:

In summary, an LOI is a document that declares the preliminary commitment of one party to do business and is not binding. On the other hand, an MOU is a document that describes the broad outlines of an agreement and is considered binding, carrying weight in a court of law.