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The term "Memorandum of Understanding" often pops up when airlines are about to order aircraft.

I'm a little confused as of the importance it carries:

  • Does it contain any details if the agreement is broken?
  • Does it state when and where aircraft will be ordered? Or is it just "we will order from you"?
  • Does it contain any details on any discounts/benefits or similar? I imagine these would in some form be put down on paper before starting negotiations with which company to order from.
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  • $\begingroup$ AFAICT usually they are options (the term "memorandum of understanding" itself is rather broad) $\endgroup$ – Jan Hudec Jun 17 '15 at 13:19
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    $\begingroup$ An MOU isn't specific to aviation, it's a general business/legal term that you find in all industries. It's a way of writing down the main terms of an agreement in advance so that there's no misunderstanding ("did they say 55 or 56 aircraft?"), before the lawyers get to work on the actual final contract. An MOU can also be used for PR purposes if you want to make a big announcement about a 'partnership' without actually committing to anything. They're often confidential and they can contain more or less anything, so it may be difficult to get a clear answer on this. $\endgroup$ – Pondlife Jun 17 '15 at 13:42
  • $\begingroup$ @Pondlife in that case that's as good answer as i'm going to get :) $\endgroup$ – Thunderstrike Jun 17 '15 at 16:46
  • $\begingroup$ @MikeFoxtrot OK, then I've written it up as an answer :-) $\endgroup$ – Pondlife Jun 17 '15 at 20:21
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A Memorandum of Understanding (MOU) isn't an aviation term or practice, it's a general business/legal term for a 'pre-contract' of some kind. Before two companies commit to a legally binding and perhaps very expensive contract, they'll often prepare an MOU to make sure that everyone involved has the same understanding of what will be in the contract. That way, there shouldn't be any big surprises or fundamental disagreements when the real contract is prepared.

In the context of aviation, that could be things like how many aircraft will be purchased and when, or what the price is anticipated to be, or anything else that both side consider important. That means that the information in an MOU could be very interesting for other parties ("can you explain why our competitors are paying you $50m less per aircraft than we do?"), so they're usually confidential.

Another common use for MOUs is for PR/Marketing purposes. If two companies are discussing a joint business venture they might come up with an MOU and use it to generate market interest or even raise capital ("I know we're a small company but we have an MOU with Boeing to jointly research alternative fuels").

Given that background, I don't think it's likely that you'll get any specific answers to your questions. An MOU could include all the things you mentioned but only a real contract is enforceable.

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