You are interested in collaborating on a specific project with another company.Another business has expressed an interest in working with your business.You own a small business and regularly partner with others.You are a business owner who plans to partner with another business.Here are a few common situations where a memorandum of understanding might be used: When Should You Use a Memorandum of Understanding Between Two Construction Companies?Īn MOU between two construction companies is used to demonstrate each party’s intent and willingness to engage in the necessary actions to move a contract forward.Ī memorandum of understanding is often used in situations where the parties either cannot or do not wish to create a legally enforceable agreement. However, since a memorandum of understanding is not a binding contract, it is not necessarily the go-ahead to order materials. A subcontractor will frequently wait on an MOU before beginning to obtain the materials needed for the project, particularly if the materials require a long lead time. In the meantime, the contractor or subcontractor may start the process of preparing for the construction project. Upon signing, the parties may then move to formal contract negotiations as the need arises.
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