What is a Memorandum of Understanding (MOU)

What is MOU aka Memorandum of Understanding

  • There are several distinctions between a separation agreement and an MOU.

  • A memorandum of understanding (MOU) is a kind of like a no-frills, bare-bones promise, a letter of intent at best, while a separation agreement is a binding contract.

  • An MOU is created to chronicle the agreements arrived at by both partners during the mediation process.

  • MOUs are most useful in several American states, where the family law system has been reformed.

You may ask what is meant by MOU aka Memorandum of Understanding and what role does it play in a settlement. So what is a memorandum?

A memorandum of understanding is a non-binding term sheet arrangement between the two parties that speaks to the parties’ intent, aka terms and conditions of an understanding, a starting point of mutually accepted expectations.

Is a Memorandum of Understanding legally binding – Not Always.

Why Have a Memorandum of Understanding?

By tradition, an MOU is the work product created by the mediator to chronicle the agreements arrived at by both partners during the mediation process. However, an MOU by itself is mostly not enforceable or binding. It keeps the lawyers in the loop to bill a few thousand dollars to create the formal contract aka Separation Agreement. Unfortunately, too many lawyers use this as an opportunity to insert a wedge of conflict. This is their way of dialling up the billing. The lawyers use words like “unlawful practice of law” to keep the mediators in their place and put fear into the clients’ minds. Fear is the fuel of the divorce industry. Real Estate Agents write legal agreements all the time when they draft agreements of purchase and sale.

What is MOU - May Not Be Worthwhile

There are several distinctions between a separation agreement and an MOU. An MOU is kind of like a no-frills, bare-bones promise, a letter of intent at best, while a separation agreement is a binding contract.

People often believe these two documents are one and the same, but they are in fact different, and mistaking them could be disastrous. Read the remainder of this article to learn the distinction between an MOU and a separation agreement.

What is MOU – What’s the Difference?

This table addresses the distinctions between memorandum of agreement (MOU) vs contract aka a separation agreement:

Compare Separation Agreement Non-binding MoU
Definition An agreement is a document by which parties commit to working together to reach a common goal. An MOU describes the terms of an agreement without being legally binding or involving the transfer of finances.
Traits It grants substantial rights to the parties. There should be a clear mention of another agreement that will be drawn, up at a later stage
Enforceable in a court of law? You can legally enforce this document in a court of law. This document cannot be legally enforced in a court of law.
Binding? Yes, always. Only if the MOU is signed with the intention of exchanging monies.

The devil is always in the details aka the final written agreement.

Get to the separation agreement aka formal contract to address the details.

Comprehensive Settlement

A comprehensive settlement usually covers the terms of a parenting plan, child support and a marital financial settlement, and this process demands the parties involved put in many hours of good faith negotiations. Terms include the equalization of a couple’s financial obligations, debts and assets, and addressing travel necessities, job schedules, and housing arrangements for kids. This can be an overwhelming period for both parties. It is the divorce mediator’s duty to instill a fair process for both parties during mediation. Mediations can take weeks or months to finalize based on how complicated the case is. So after all this effort, why not just draft a mutually beneficial separation agreement and skip the whole MOU minutia?

Here Is the Rub – Traditional Mediation in Ontario

After reaching an agreement, the mediator drafts the couple’s agreement terms into an MOU. The MOU is then sent off to lawyers to be re-drafted into a separation agreement. I could be the Stephen King of memorandum writing, only to have a lawyer who was not present in the mediation—who has no feel or understanding of the context of the entire settlement—take your MOU in a different direction for their self-serving motivations, injecting conflict where there was none.

Converting an MOU into a Separation Agreement

A separation agreement accompanied by a Certificate of Independent Legal Advice (CILA) is set in stone legally when each party signs it. A CILA is like a lawyer’s affidavit that indicates he or she has checked in with you. It confirms that you clearly understand what your separation agreement means for your future.

Where a Memorandum of Understanding MOU has value

MOUs are most useful in several American states, where the family law system has been reformed. For example, in Colorado an MOU is typically authored by a non-lawyer mediator. The MOU becomes binding when the couple files the MOU with the family court as a mutual consent divorce.

Sadly, this is not the practice in Canada, as our family law procedures are 25 years behind the times and are in desperate need of reform.

For every dilemma there are many possible solutions, and there is a growing number of mediators drafting some fantastic future-forced separation agreements.

Knowing what your mediator produces for work product is important to know when choosing a divorce mediator. You need to know what you are getting for your money.

Here Is the Rub – Traditional Mediation in Ontario

After reaching an agreement, the mediator drafts the couple’s agreement terms into an MOU. The MOU is then sent off to lawyers to be re-drafted into a separation agreement. I could be the Stephen King of memorandum writing, only to have a lawyer who was not present in the mediation—who has no feel or understanding of the context of the entire settlement—take your MOU in a different direction for their self-serving motivations, injecting conflict where there was none.

Converting an MOU into a Separation Agreement

A separation agreement accompanied by a Certificate of Independent Legal Advice (CILA) is set in stone legally when each party signs it. A CILA is like a lawyer’s affidavit that indicates he or she has checked in with you. It confirms that you clearly understand what your separation agreement means for your future.

Where a Memorandum of Understanding MOU has value

MOUs are most useful in several American states, where the family law system has been reformed. For example, in Colorado an MOU is typically authored by a non-lawyer mediator. The MOU becomes binding when the couple files the MOU with the family court as a mutual consent divorce.

Sadly, this is not the practice in Canada, as our family law procedures are 25 years behind the times and are in desperate need of reform.

For every dilemma there are many possible solutions, and there is a growing number of mediators drafting some fantastic future-forced separation agreements.

Knowing what your mediator produces for work product is important to know when choosing a divorce mediator. You need to know what you are getting for your money.

Divorce Memorandum of Understanding Template

The Master Agreement for Separation & Divorce, Second Edition is a drafting guide that will save you days of drafting and improve your work product. The Master Agreement is not state/province law specific, but issue-driven and applicable to all jurisdictions. The Master Agreement is designed to be used both by lawyers for your formal agreements as well as by non-lawyer mediators for your memoranda of understanding – aka an MOU template in MS Word.

Link to mediate.com The Master Agreement 

Conclusion

A comprehensive settlement usually covers the terms of a parenting plan, child support and a marital financial settlement, and this process demands the parties involved put in many hours of good faith negotiations. Terms include the equalization of a couple’s financial obligations, debts and assets, and addressing travel necessities, job schedules, and housing arrangements for kids. This can be an overwhelming period for both parties. It is the divorce mediator’s duty to instill a fair process for both parties during mediation. Mediations can take weeks or months to finalize based on how complicated the case is. So after all this effort, why not just create a legally enforceable separation agreement and skip the whole MOU minutia?

Are you having trouble reaching an agreement on your finances? Do you want to avoid going before the judge and asking for help? Consider working with a family mediator who can help you end your marriage in a way that is peaceful, cost-effective, and child-focused.

Would you like to learn more? Get in touch for a Get Acquainted Call to learn more about finding a separation agreement with a soft landing.

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Skip the MOU and get to the Separation Agreement!

I help outcome-focused separating couples create separation agreements with clarity and soft landings for secure futures in 6 steps or less without lawyer created overwhelming conflicts, confusion and costs.

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About the Author:
Ken Maynard CDFA, Acc.FM

I help smart and successful couples, create separation agreements with clarity and soft landings for secure futures, in 4 meetings or less without all the lawyer created overwhelming conflicts, confusion and costs. You can work with me by video conference or with a DTSW associate at any of our 6 DTSW Greater Toronto mediation centers, including | Aurora | Barrie | North York | Vaughan | Mississauga | Scarborough.

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