MOU : Is it a legal contract? if not, what is it?

A Memorandum of Understanding (or MOU) records the common intent between

parties where they do not wish to assume legally binding obligations. A contract is a
legally binding agreement. If a contract is breached, the other party to the contract is
entitled to enforce the contract, or seek remedies under it, through the courts. If a
document is detailed, imposes conditions and includes important terms (for example,
details of insurance or indemnities) it is likely to be considered a contract by the
courts even though it is called an MOU. Such documents need to be reviewed by the
Legal Office prior to execution. If the document provides a broad framework or set of
principles to guide the parties in undertaking a project or collaboration, and leaves
the specifics of the project or arrangement for later negotiation between the parties, it
is an MOU and is unlikely to be enforceable as a contract.
The question of whether or not an MOU is legally binding is a question
involving principles of contract law. In general, a document is considered to be
binding if there is an offer, acceptance, an intention to be legally bound, and
consideration (the exchange of something valuable). The intention of the parties at
the time of signing the MOU is important to determining whether or not the document
is binding. If the intention of the singning MOU is unclear, but the terms of the MOU
are clearly defined and the MOU is supported by consideration, there is a strong
presumption at law that they intended to create a legally binding contract, despite the
document being called an MOU. If it is the intention of the University that a document
be non-binding, the document should provide explicitly that the parties do not intend
to enter into a legally binding arrangement, but nevertheless intend to comply with
the framework provided by the document.
Sometimes an MOU will need to contain some legally binding clauses, despite
the intention of the parties for the majority of the document to be non-binding.
Clauses which the parties may wish to be legally binding include confidentiality and
privacy provisions. Despite expression of this intention, disputes can still arise as to
whether other clauses in the MOU are also intended to be legally binding. These
disputes can arise from the use of language in the MOU which conveys a binding
intention. Use of phrases such as the parties must, the parties will or a party
shall tend to convey such an intention. The use of such expressions should be
avoided, while expressions such as the parties intend or the objectives of the
parties are should be used instead.