What is the informal, non-binding agreement between two parties called?

• A. Deliverable
• B. Contract
• C. Project Charter
• D. Memorandum of Understanding (MOU)

Answer: (D)

The main idea here is the informal, non-binding agreement between two parties: a Memorandum of Understanding. An MOU lays out the intent to collaborate and captures high-level terms such as what each party will do, the scope, responsibilities, and expected timelines. Because it’s not a legally binding contract, it isn’t typically enforceable in court in the way a contract would, though it can establish clear expectations and serve as a basis for future, more formal agreements. MOUs are commonly used early in a relationship to ensure both sides are aligned before moving on to a binding contract or official project work.

Deliverable refers to a tangible or measurable output of a project, not an agreement. A contract is a legal, binding agreement with enforceable obligations. A project charter is a document that officially authorizes a project and outlines initial objectives and high-level information; it creates authority and commitment within the organization. An MOU best fits the description as the informal, non-binding agreement.