What is the primary difference between a contract and a memorandum of understanding (MOU)?

A contract is fundamentally a legally binding agreement between parties, which typically includes specific terms, conditions, and obligations that must be fulfilled. In contrast, a memorandum of understanding (MOU) serves as a formal document that outlines the intentions and mutual understanding of the parties involved, but it does not create legal obligations. The primary purpose of an MOU is to indicate a willingness to collaborate or work together without committing legally, giving parties flexibility to negotiate further without the constraints of a binding contract.

The other options may touch on some aspects of contracts and MOUs, but they do not accurately capture the essential legal distinction. For instance, while a contract does often have detailed specifications, the core difference lies in the binding nature of the agreement—something that the first choice aptly highlights. Similarly, stating that an MOU is legally binding contradicts the fundamental nature of an MOU. Lastly, while contracts may specify delivery dates, this does not inherently differentiate them from MOUs, as both documents can vary significantly in content and specificity depending on the context.