Memorandum
A written record of an agreement, decision, or communication; may be binding depending on language and intent.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Memorandum?
A memorandum is a written record of an agreement, decision, or communication. In business, memoranda document understandings between parties, decisions by management, or records of conversations. In law, a memorandum is evidence and can be binding if it contains material terms and manifests intent to be legally bound.
A memorandum is less formal than a contract but may still be legally enforceable. Courts examine whether the parties intended the memorandum to be binding. If essential terms are included and both parties signed, the memorandum may be treated as a binding contract.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Documentation Function
A memorandum serves to document an agreement or communication. It creates a written record that can be referenced later to resolve disputes about what was agreed or decided.Binding or Non-Binding
Whether a memorandum is binding depends on intent. A memo marked "non-binding" or "subject to further negotiation" is not binding. A memo with all material terms, signed by both parties, may be binding.Statute of Frauds Compliance
A memorandum can satisfy the statute of frauds requirement for certain contracts (land, goods over $500). If the memo contains essential terms and is signed, it may be enforceable even if not a formal contract.Admissibility in Litigation
A memorandum is evidence. Memos of conversation, internal memos, and inter-office communications can be subpoenaed and presented at trial. Statements in memos can constitute admissions against the party making them.Confidential Memos
Some memos (attorney-client memos, attorney work product) may be protected from disclosure by attorney-client privilege or work product doctrine. Business memos are generally not privileged.Real-World Example
Two business associates meet and memo: "To confirm: we discussed a partnership. Partner A contributes $100K capital; Partner B contributes 5 years of management. Profits split 50-50." Both sign. Later, they dispute whether a binding agreement exists.
The memo may be binding. It documents intent to form a partnership, lists material terms (capital, profit split), and is signed. Courts would likely treat it as a binding agreement despite its informal nature.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Memorandum of AgreementWatch Out For
Assuming a memo is non-binding without stating so
If you do not mark a memo as "non-binding" or "subject to further negotiation," a court may treat it as binding if it contains material terms. Be explicit if you do not intend a memo to be binding.Creating memos about illegal activities
Memos documenting illegal conduct can be admitted as evidence and used against you. Be careful what you commit to writing, especially regarding potentially illegal or unethical matters.Ignoring attorney-client privilege
Memos to your attorney are privileged and generally cannot be disclosed. But memos sent to others or that discuss business (not legal advice) are not privileged and can be discovered and used against you.Don't let memorandum deadlines catch you off guard
Key dates tied to memorandums - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Mark non-binding memos clearly
If a memo is exploratory and not intended to be binding, say so: "This is a non-binding memorandum of understanding, subject to execution of a formal agreement." This prevents later disputes about intent.Use memos to document agreements
A memo can be an easy way to document a preliminary agreement. Include essential terms (price, delivery, parties). A memo with material terms can be binding even if not formal.Be careful with internal memos
Internal memos can be discovered and used against you in litigation. Avoid admissions, inflammatory statements, or documentation of illegal conduct in memos. When in doubt, ask an attorney.Related Terms
Frequently Asked Questions
Can a memorandum of understanding be a binding contract?
Yes, if it contains material terms and both parties manifest intent to be bound. Courts look at whether the parties treated it as binding and whether all essential terms are included. A memo can be as binding as a formal contract.
Is a memo admissible as evidence in court?
Yes, generally. Memos are documents and can be submitted as evidence. Exceptions include attorney-client privileged memos and attorney work product (memos prepared by or at the direction of an attorney for litigation).
Can a memo satisfy the statute of frauds?
Yes. For contracts required to be in writing (land, goods, contracts over one year), a signed memo containing material terms can satisfy statute of frauds and be enforceable.