Cambodian Contract Law: Memorandum of Understanding (MoU)

What is MoU? Is MoU binding obligations of the parties and enforceable under the laws of Cambodia?  MoU has been used for both commercial and non-commercial transactions in Cambodia. The Civil Code of Cambodia does not define MoU. However, MoU has been seen as a form of the agreement through which parties intend or do not intend to create contractual or binding relations among themselves. 

Can parties conclude non-binding agreement? The Civil Code of Cambodia, Article 311, defines a contract as the matching of intentions held by two or more parties for the purpose of creating, amending or extinguishing an obligation. Moreover, based on principle of freedom of contract, parties may decide the content of their contract. Accordingly, the parties may agree to create or not to create obligations at their own wills.

How do we determine MoU a binding or non-binding agreement? We cannot tell the answer until we read its content to finger out whether or not the parties intend to create obligation or binding agreement. In practice of non-binding MoU, the parties clearly define their intention not to create any obligations or binding relation among themselves. Hence, such MoU cannot been enforced against the parties. However, if parties fail to clarify their intention on such non-binding relation, it is more likely that the MoU is deemed as a binding agreement and enforceable under the laws of Cambodia.

In conclusion, whether or not an agreement is binding obligations of the parties and can be enforced totally depends on its content, not its title.

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1 thought on “Cambodian Contract Law: Memorandum of Understanding (MoU)

  1. Good article.

    Like

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