[5] In business, an MoU is typically a legally non-binding agreement between two (or more) parties, outlining terms and details of a mutual understanding or agreement, noting each party's requirements and responsibilities—but without establishing a formal, legally enforceable contract (though an MoU is often a first step towards the development of a formal contract).
[6] In practice and in spite of the United Nations Office of Legal Affairs' insistence that registration be done to avoid 'secret diplomacy', MoUs are sometimes kept confidential.
The International Court of Justice has provided some insight into the determination of the legal status of a document in the landmark case of Qatar v. Bahrain, 1 July 1994.
[7] One advantage of MoUs over more formal instruments is that, because obligations under international law may be avoided, they can often be put into effect without requiring legislative approval.
[8] The decision concerning ratification, however, is determined by the parties' internal law and depends to a large degree on the subject agreed upon.