Although an MOU is not legally binding, it allows parties to prepare for signing a contract by explaining the broad concepts and expectations of their agreement.

Does a Memorandum of Understanding need to be signed?

An MoU is a 'Memorandum of Understanding'. ... You should sign an MOU when you do not intend to create legally binding arrangements. Legally binding terms in an MoU. An MOU may be legally binding if it satisfies the elements of a contract.

Why MOU is not legally binding?

MOUs generally aren't legally binding, and therefore the parties to the MOU avoid all kinds of legal ramifications. Even though the document isn't legally binding yet it carries a degree of seriousness and mutual respect. Rather, it marks the intention of the parties to enter into a proper legal agreement.