Untangling the Memorandum of Understanding

A “contract” is a legally binding agreement that obligates parties to do or not do something.  It can be verbal or written, short or long, formal or informal, general or detailed.  It can fall under a variety of names (agreement, purchase order, letter of intent/commitment/authorization, award, grant) and a spectrum of possible remedies.  Regardless of its name, though, a contract should, at a minimum, identify the parties, the subject, and the “consideration” (motive or inducement); have mutual obligations; and evidence mutual agreement.

A Memorandum of Understanding (“MOU”) is a specific type of contract, one that usually includes a (relatively) brief written statement outlining the terms of the parties’ agreement or understanding of how they will proceed on a particular project or goal.  As a rule of thumb, if money is involved, a MOU is probably not the right vehicle.  At JHURA, when money is involved, a formal, full-blown, detailed contract is usually developed to document the transaction and track and account for the funds being exchanged.

A MOU is the agreement we use when no transfer of funds is involved, but the parties are doing such things as:

  • Collaborating on developing ideas and proposals;
  • Pledging their resources to foster or facilitate knowledge or programs by co-hosting a conference or exchanging graduate students;
  • Hosting another party’s intern or volunteer at a field project;
  • Developing courses for another university, or allowing another institution to access JHU classes or resources; or
  • Pledging funds from their respective projects/awards in order to collaborate on a task or undertaking for that sponsor.

The MOU functions more as a gentleman’s agreement than a structured research contract, as it is much more general in terms and obligations, and the risk for a party’s failure to cooperate/perform is more to their reputation than to their wallet.  However, make no mistake:  It is still a contract, and if, for example, it contains an arbitration provision, the losing party may be ordered to perform certain of its activities required within.

When considering whether an MOU is appropriate, we usually start by asking the following questions:

  • Will there be any exchange of money?
  • Even if no exchange of money, where are the resources coming from for JHU’s roles and responsibilities of the MOU?
  • Will there be any intellectual property created by JHU as part of the MOU?
  • Will JHU be issuing or supporting any academic courses, and is it clear the participants will or will not receive academic credits issued by JHU?
  • Is there any reference to academic credits?  If so, additional level of review of the MOU by the University’s Provost’s Office is required.
  • Where will the activities take place? If at JHU, are there adequate approvals and resources available?

Once we are armed with answers to the above, we can then begin working on an agreement reflects the intentions of the institutions.  Because JHU takes great pride in its name and reputation, we take MOUs very seriously.  They are viewed as legally binding contracts, and reviewed by JHURA to ensure that they contain the appropriate provisions to protect the School in its undertakings, and ensure the parties’ understanding of their respective responsibilities and rights.