Memorandums of Understanding (MoUs) are not legally binding, but they reflect a mutual intent to move forward with a deal and carry more weight than a verbal or gentleman’s agreement. They are often used as a preliminary step before drafting a formal contract. For example, if you’re buying a house but can only pay after six months, you and the seller can sign an MoU stating your intent to pay later, with a token advance upfront. The formal legal documentation would follow at a later stage.