Common Agreements
product or service your company wants to purchase. Key parts of an RFP include why
your company requires the product or service, how the product or service will be used,
how and when the proposals will be evaluated, and a list of items a vendor should
include in its proposal (for example, a detailed description of its product or service,
technical support, user training, and initial and ongoing costs).
• MOU—An MOU (memorandum of understanding) documents the intentions of
two or more parties to enter into a binding agreement, or contract, and is sometimes
used between an informal handshake and the legally binding signatures on contracts.
The MOU can be helpful in pushing along contract negotiations and in defining specific
concerns of each party, but it is usually not a legally binding document, does not grant
extensive rights to either party, provides no legal recourse, and is not intended to provide
a thorough coverage of the agreement to come.
• SOW—An SOW (statement of work) documents in detail the work that must be
completed for a particular project, and includes specifics such as tasks, deliverables,
standards, payment schedule, and work timeline. A SOW is legally binding, meaning
it can be enforced in a court of law.
• SLA—An SLA (service-level agreement) is a legally binding contract or part
of a contract that defines, in plain language and in measurable terms, the aspects of a
service provided to a customer, such as the service provided by an ISP. Details specified
might include contract duration (minimum or maximum), guaranteed uptime, problem
management, performance benchmarks, and termination options.
• MSA—An MSA (master service agreement) is a contract that defines the terms of
future contracts between parties, such as payment terms or arbitration
arrangements.
• MLA—An MLA (master license agreement) grants a license from a creator, developer,
or producer, such as a software producer, to a third party for the purposes of market-
ing, sublicensing, or distributing the product to consumers as a stand-alone product or
as part of another product.
