When entering into a legal transaction, the parties have two options at their disposal, to say an agreement or a statement of intent. While an agreement refers to the agreement between the legally competent parties, which is usually negotiated. Conversely, the Memorandum of Understanding (MoU) is a type of agreement between legally competent parties that is not binding. Although it is not a legally binding document, the letter of intent is an important step because of the time and effort required to negotiate and draft an effective document. In order to establish a letter of intent, the parties concerned must reach mutual understanding. Each party learns what is most important to others before moving forward. A letter of intent is usually a non-binding agreement between the parties that documents a goodwill relationship between the parties. Memoranda of Understanding describe the parties` understanding of the intended relationship between them and may be the first step in establishing a formal contract. Most businessmen, government agencies, legal entities, and individuals often use these two entities in their daily lives to do with another party to achieve a common goal. The parties must understand that if they want their decisions to be binding on each other, they can argue for an agreement that establishes their essential rights for the parties, and they can also enforce them in court. However, if the parties do not want a legal obligation for them, they can opt for a memorandum of understanding. However, a letter of intent is not enforceable, if one of the parties has done something about the letter of intent and the other party has suffered a loss as a result, the aggrieved party has the right to recover the loss because the parties are bound by legal forfeiture.

A Memorandum of Understanding (MOA) or Cooperation Agreement is a written document between the parties to work together on an agreed project or achieve an agreed goal. The purpose of a Memorandum of Understanding is to have a written understanding of the agreement between the parties. The Memorandum of Understanding can also make legally valid and the parties responsible for their obligation, or simply a partnership agreement. In the context of sharing agreements, a letter of intent is often used to define the expectations and responsibilities of each party. These MEMoranda of Understanding generally address issues such as: (1) who is responsible for the cost of maintenance and repairs, (2) insurance and liability, (3) personnel and communications, and (4) dispute resolution. Whether the terms of these agreements are legally enforceable as a contract ultimately depends on the intention of the parties. Therefore, parties to a sharing agreement should address the legal status of their agreement early in the negotiation process. Memoranda of Understanding are like contracts that define how two organizations will work together. While memoranda of understanding are technically legally binding, consider these documents as a tool to facilitate partnership and ensure a harmonious working relationship between two organizations.