Document background
The Memorandum of Understanding Between Two Partners is a crucial preliminary document used in German business practice when organizations wish to formalize their intentions to collaborate while maintaining flexibility in their negotiations. It serves as a stepping stone towards a more detailed, binding agreement while establishing clear parameters for discussion and cooperation. Under German law, while generally non-binding, certain provisions such as confidentiality and exclusivity can be made explicitly binding, and the document creates pre-contractual obligations under the principle of culpa in contrahendo. This type of MoU is particularly valuable in complex business relationships where parties need to outline their shared vision and objectives before committing to detailed contractual obligations. It typically precedes more comprehensive agreements such as joint venture contracts, strategic partnerships, or collaboration agreements.
