A Memorandum of Understanding (MOU) is a binding agreement between two or more parties that outlines an understanding of the commitments and expectations for a particular business arrangement. It acts as a formalized contract that covers key points of a deal, including the purpose of the arrangement, relevant terms and conditions, and any applicable timelines or deadlines. It also sets out how matters will be handled if issues arise or disagreements arise in the future. An MOU is often used when contractual obligations are not required but a comprehensive agreement is desired. It can help to simplify longer contracts and provide clarity on the expectations and responsibilities of each party, so that every stakeholder is aware of their involvement and any potential implications.