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A construction MOU indicates the impending signing of a contract, but it does not bind the parties. After the memo is signed, either party may decide not to form a contract at any time without the other party having any legal recourse. Don't, however, assume that a memo is always non-binding.

A memorandum of understanding (MOU) is a formal agreement that outlines plans for a common line of action between two or more parties. An MOU is used when companies plan to work together or partner on a project or similar venture. In government, these agreements are used to coordinate interagency work.

Subcontractor example For example, a building contractor may hire a subcontractor to complete the electrical wiring part of the contractor's building job. The contractor is responsible to the client for the building job including the part performed by the subcontractor.

An MOU is typically drawn up between a general contractor and subcontractor or a project owner. An MOU between two construction companies is frequently used to begin the relationship and set the tone between contractors before the issuing of a formal contract.

A subcontractor (or sub-contractor) is a company or person whom a general contractor, prime contractor or main contractor hires to perform a specific task as part of an overall project and normally pays for services provided to the project.

An MOU is typically drawn up between a general contractor and subcontractor or a project owner. An MOU between two construction companies is frequently used to begin the relationship and set the tone between contractors before the issuing of a formal contract.