A Memorandum of Understanding (MOU) or a Memorandum of Agreement (MOA) is a written agreement, usually simpler and less formal than a legal contract, which outlines an agreement between parties. An MOU doesn’t need to include complicated legal conditions, exclusions, indemnifications, etc.

A contract is a legally binding agreement between parties that is enforceable in a court of law. A contract generally includes language defining what would constitute a breach of contract, and outlines the damages or compensation due if a partner fails to fulfill its contractual obligations. A contract may also include indemnification provisions detailing whether and how a partner bears legal responsibility for the actions of another partner. Compared with a less formal agreement, a contract provides more legal protection to each partner.