A Guide To MOUs For Business Partnerships 

During early-stage discussions of a potential partnership, the party in a weaker position is often more eager to formalise the arrangement while the other party views early commitment as premature or risky.

This difference in expectations can quickly create tension and stall the progress of the collaboration. 

When clients come to us facing this problem, our primary solution is a Memorandum of Understanding (MOU) to  align expectations, clarify responsibilities, and provide a soft framework that reduces risk for both sides.  

Why an MOU before a Business Partnership Agreement? 

A Memorandum of Understanding offers a generally non-binding solution, but it can be specifically written to carry legal weight if all parties agree to it.  

In this way, it provides a formal structure for parties to: 

• clarify commercial intentions and the objectives of the partnership or collaboration 
• define roles and responsibilities on a trial or exploratory basis 
• test compatibility in decision-making, work styles, and communication 
• prevent misunderstandings by documenting shared assumptions or preliminary deal terms 

When it feels premature to jump into a Partnership or Collaboration Agreement, and MOU acts a legal ‘trial period’ that can lead into a formal agreement if all goes well, giving peace of mind and keeping discussions moving. 

Key MOU clauses for a business partnership 

Consider clauses that address both the operational and strategic dimensions of the relationship: 

Clause	Description
Purpose and Scope	Define what the MOU covers and excludes to avoid misunderstandings.
Roles and Contribution	Outline each party’s responsibilities and deliverables.
Cost and Expense Allocation	Clarify who pays for what, how costs are shared, and if approvals are needed.
Performance Period	Set a trial duration with basic KPIs to assess progress.
Decision-Making and Communication	Define decision process, key contacts, and meeting cadence.
Confidentiality	Protect shared sensitive or proprietary information.
IP Ownership or Licensing	State who owns or can use any created/shared assets.
Termination	Allow either party to exit after the MOU period.

Hypothetical example 

Let’s say a SaaS and consulting company are exploring a partnership to offer bundled services. 

Both are excited and exchange verbal commitments, but then confusion sets in as: 

• the SaaS company assumes the consultant will handle onboarding and client’s support 
• the consultant expects immediate access to leads from the SaaS’ customer database 

As weeks go by with no formal timeline or fallback if things go off track, tension builds.  

Eventually, one too many calls are missed, and without a formal mechanism for accountability, the partnership fades away, leaving both parties unsure of what went wrong or how to move forward. 

How an MOU could have helped 

A well-crafted MOU could have helped both sides: 

• define trial responsibilities (who does what, and by when) 
• agree on performance indicators 
• clarify ownership of shared materials 
• create a clean exit mechanism 

In this way, if things didn’t work out, it would be for the right reasons, rather than miscommunication from all sides. 

Takeaways for businesses 

We often see early collaborations fall apart not because of a lack of enthusiasm or bad intentions, but because roles, contributions, costs, and outcomes were assumed. 

By using an MOU at the exploratory stage, business owners can create a clear, written reference point that improves communication, manages commitment, and protects early-stage collaboration.  

Once both parties are aligned, they can confidently proceed with a Partnership Agreement.