Memorandum of Understanding (MOU)

A Memorandum of Understanding (MOU) is a written record of the main commercial understanding between two or more parties who intend to work together but have not yet signed a full contract. It is used in Bangladesh across many settings — a foreign brand exploring a local distributor, two SMEs beginning a joint bid, a hospital and an NGO planning a health camp, a university and a training institute co-designing a course. A well-drafted MOU pins down the scope of cooperation, each party's role, the milestones and dates, the financial split (if any), the confidentiality expectation, and whether the MOU is binding, non-binding, or a mix. The single most important sentence in an MOU is the binding-status clause: MOUs are often written loosely on the assumption they are 'non-binding' but end up being enforced when they are not clear on that point.

Stamp & registrationTypically executed on Tk. 300 non-judicial stamp with two witnesses. If the MOU is intended to be non-binding except for specific clauses (like the confidentiality and exclusivity clauses), say so explicitly — courts in Bangladesh will look at the language, not just the label 'MOU', to decide whether the document creates enforceable obligations.

What this agreement typically contains

Full identity of the parties
Recital / background — how the parties came together and what they want to explore
Scope of the intended cooperation
Each party's specific roles, deliverables, and time commitments
Milestones and target dates
Financial arrangement — investment, revenue share, cost split (if any)
Confidentiality obligations — what remains confidential, for how long
Exclusivity — whether either party is barred from parallel talks
Binding vs non-binding status — spelled out clause by clause
Term of the MOU and how it can be terminated
Governing law (Bangladesh) and dispute-resolution route
Signatures of authorised representatives of each party and witnesses

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Frequently asked questions

Is an MOU legally binding in Bangladesh?: It depends entirely on what the MOU says. Under the Contract Act, 1872, an agreement is binding if there is offer, acceptance, consideration and an intention to create legal relations. Many MOUs are drafted as records of intent without such elements and are treated as non-binding — but if the language commits the parties to specific acts, a Bangladeshi court can and does enforce them. The safest practice is to explicitly state, in a clearly-labelled clause, which parts of the MOU are binding (typically confidentiality, exclusivity, and any advance payment already made) and which are non-binding (typically the scope-of-work intent).
What's the difference between an MOU and a Letter of Intent (LOI)?: In practice, very little — both are pre-contract instruments used to record a commercial understanding before the main contract is signed. LOIs tend to be more formal and one-directional (one party addressing the other), while MOUs are bilateral or multilateral. Both raise the same binding-vs-non-binding question and should be drafted with the same care. If in doubt, use an MOU with an explicit binding-status clause.

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What this agreement typically contains

Full identity of the parties

Recital / background — how the parties came together and what they want to explore

Scope of the intended cooperation

Each party's specific roles, deliverables, and time commitments

Milestones and target dates

Financial arrangement — investment, revenue share, cost split (if any)

Confidentiality obligations — what remains confidential, for how long

Exclusivity — whether either party is barred from parallel talks

Binding vs non-binding status — spelled out clause by clause

Term of the MOU and how it can be terminated

Governing law (Bangladesh) and dispute-resolution route

Signatures of authorised representatives of each party and witnesses

Frequently asked questions

Is an MOU legally binding in Bangladesh?

It depends entirely on what the MOU says. Under the Contract Act, 1872, an agreement is binding if there is offer, acceptance, consideration and an intention to create legal relations. Many MOUs are drafted as records of intent without such elements and are treated as non-binding — but if the language commits the parties to specific acts, a Bangladeshi court can and does enforce them. The safest practice is to explicitly state, in a clearly-labelled clause, which parts of the MOU are binding (typically confidentiality, exclusivity, and any advance payment already made) and which are non-binding (typically the scope-of-work intent).

What's the difference between an MOU and a Letter of Intent (LOI)?

In practice, very little — both are pre-contract instruments used to record a commercial understanding before the main contract is signed. LOIs tend to be more formal and one-directional (one party addressing the other), while MOUs are bilateral or multilateral. Both raise the same binding-vs-non-binding question and should be drafted with the same care. If in doubt, use an MOU with an explicit binding-status clause.