Memorandum: Overview, definition, and example
What is a memorandum?
A memorandum is a written document used to record agreements, summarize key information, or communicate important details within an organization or between parties. Memoranda (plural of memorandum) can be formal or informal, depending on the purpose, and are commonly used in business, legal, and government settings.
For example, in business, a company may issue an internal memorandum to employees outlining new workplace policies. In legal contexts, a memorandum of understanding (MOU) can summarize the terms of an agreement before a formal contract is signed.
Why is a memorandum important?
A memorandum is important because it provides a clear and documented record of information, reducing misunderstandings and ensuring that all parties are on the same page. In business and legal transactions, memoranda serve as reference points that outline commitments, obligations, or procedural details.
For businesses, memoranda are frequently used to communicate policies, project updates, or strategic plans. In legal and financial contexts, memoranda help document important details before formalizing agreements, making them useful for due diligence and compliance.
Understanding a memorandum through an example
Imagine a company’s human resources department issues a memorandum informing employees of a change in remote work policies. The memorandum states that starting next month, employees must work in the office at least three days per week. This ensures that all staff are aware of the new policy.
In another example, two companies exploring a joint venture sign a memorandum of understanding (MOU) outlining the basic terms of their collaboration, such as profit-sharing, project scope, and responsibilities. While not always legally binding, the memorandum helps clarify expectations before drafting a formal contract.
An example of a memorandum clause
Here’s how a memorandum clause might appear in a contract:
“The Parties acknowledge that this Memorandum serves as a record of preliminary discussions and shall not create binding legal obligations, except where expressly stated otherwise.”
Conclusion
A memorandum is a useful document for recording agreements, summarizing important information, and communicating policies. It plays a critical role in business, legal, and government settings by ensuring that key details are documented and understood. Whether used for internal communication or as a precursor to a formal contract, a well-drafted memorandum helps improve clarity and accountability.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.