Memorandum of Understanding (Commercial Transactions)
This form of Memorandum of Understanding (Commercial Transactions) (“MOU”) is designed to be used where the parties to a proposed commercial arrangement have reached a preliminary deal but have yet to negotiate the full legal and commercial terms and other details which will comprise the whole arrangement.
The data protection provisions in this document have been updated with reference to the UK GDPR.
This MOU is designed to be followed by a much more detailed document, the formal contract. That contract would then definitively govern the commercial arrangement in question, and it would replace and supersede the MOU.
This form of MOU does not make provision for any work to be carried out, or indeed for anything to be done pending signature of a definitive contract.
Until the definitive binding contract is signed, the parties will need protection from each other in certain respects, and the MOU achieves this by making certain of its provisions binding. In this template, most of the provisions are of a “boilerplate” nature and are stated to be binding in order to protect the parties. Those provisions include an Exclusivity / Lockout clause designed to stop, for a stated period, either party discussing or entering into a rival deal with a third party. See also those other templates in this subfolder which include similar exclusivity/lockout clauses.
Notably the statement of the interim “deal” (in paragraph 2) is not binding since it is to be the subject of further subsequent detailed negotiation and agreement, and it is this paragraph which the parties will need to complete in this form of MOU.
This template might instead be headed “Heads of Terms” if that is preferred by the parties to it, since the heading itself does not affect its legal status or effect. (Its status and effect is determined by its content).
Before using this template, we recommend that you read the Guidance Notes on Heads of Terms, Memoranda of Understanding, Letters of Intent and Term Sheets in this subfolder.
Optional phrases / clauses and notes are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Memorandum of Understanding (Commercial Transactions) contains the following clauses:
1. Definitions and Interpretation
3. Commercial for Proposed Transactions, Preconditions and Assumptions
4. Ongoing Negotiation
5. Confidentiality, Intellectual Property Rights and Data Protection
7. Exclusivity / Lockout
9. Inadequacy of Damages
10. Third Party Rights
11. Law and Jurisdiction
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