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I recently watched a video of a controversial head-of-state expressing his views on MOU's in the context of international trade. It seems the view expressed boils down to "An MOU is not a contract/binding agreement".

A senior negotiator responded asserting that an MOU IS an actual contract. Commentators poked fun at the head-of-state "not knowing that an MOU is an agreement".

My belief loosely mirrored those expressed of the head-of-state's - ie that an MOU is more of a "guidance document" from which contracts/agreements follow. I expect a court might consider it as part of a understanding larger picture of an unclear agreement, but that an MOU is not a reliable legal document, often falling short of an agreement and are not binding to anything like the same extent that a contract is.

(To the extent anyone may be aware of the specific MOU controversy in question, I do not believe that an MOU is meaningless, rather that it is an imprecise document with very limited enforce-ability. I do accept that the contents of the MOU make all the difference and some may be more enforceable then others depending the extent to which they contain all the elements of a contract)

So 2 questions -

  1. Does an MOU have a different meaning/status/relevance in trade agreements to a typical MOU (a view expounded by some detractors of the head of state)?

  2. Is my understanding of an MOU flawed ? Is an MOU on trade equivalent to a Trade Agreement?

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A contract is a legally binding agreement governing a commercial relationship under national law.

A treaty is a legally binding agreement between nation states once ratified and given effect under each nations local law.

MOU are agreements that are not legally binding. That doesn’t mean there aren’t consequences for breaking them - just not legally enforceable ones.

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  • An individual with a contract dispute will have it determined by a legal process, often a court. Such international tribunals as exist are voluntary, a nation can withdraw at any time. Indeed a nation can withdrew from a treaty. It risks retaliation, and loss of international reputation. It may even risk war. But there is no binding authority to adjudicate treaties as there is to adjudicate contracts. – David Siegel Jun 9 '19 at 16:12
  • @DavidSiegel while it is true that a country can repudiate a treaty that is outside the realm of law. Putting pariah status aside, there are plenty of binding international dispute settlement bodies - the International Courts of Justice, the Word Trade Organisation, the Court of Arbitration for Sport, the European Court of Human Rights etc. Also, many free-trade treaties contain investor-state dispute clauses allowing the nations to be sued by foreign businesses. – Dale M Jun 9 '19 at 21:55
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The answer requires some grounding of the nature of treaties and international relations (IR). I've found that in general that people are swimming in seas of thought without know that they are doing so and what the nature of that particular sea is, how it got there, whether it has changed over time, and if there other seas. Subsequently they often try to puzzle things out from first principles without knowing

Just as a proof is a proof, a treaty is a treaty and an MOU is a MOU. A MOU can become a treaty but that's only because a nation has decided that it's a treaty and obliged itself to it.

There's a caveat to that, which will take up the next 3 paragraphs, in that the IR community has agreed that there are some universal laws, which all nations and all persons are obliged to keep, but it's interesting that the people most keen on using them to try to bell certain cats are those who are rather selective about what universal rights exist – the Lockean triad of property rights, the liberty of the subject, and basically being able to exist being particularly nettlesome for them-- and are substantially rather more keen on the concept of positive law rather than natural law to the extent of trying to suppress the founts of the idea of natural law to the extent that although saying 2+2=4 is not yet a problem, stating that a man is biologically a man and a woman is biologically a woman is.

It must be pointed out that the concept of a universal arises out of Western political thought, which is comprised of two major sources: ancient philosophy and Christianity, often metaphorically referred to as Athens and Jerusalem. It doesn't matter if you like that reality or not; it is reality, just as real as the existence of meteor impact craters on the Moon (and the Earth for that matter).

The UN declaration of universal Human rights, at the high water mark of the confidence and influence of the Western world –that is to say Western thought - after the second world war but before the corrosion of things like relativism and the Frankfurt school etc., arises out of that.

Apart from that, the society of nations in the Westphalian world is contractual in nature; a nation enters into an agreement with one or many other nations to do {something} and they, as a consequence, enter into obligations (and benefits ) from whatever the treaty is about.

For example, no matter how much the citizens or government of country A and country B may not like it, there is no obligation for either country to provide relief from double taxation and to map between entirely different taxation schemes.

An example of that is that Americans resident in Canada very soon learn that the US tax law doesn't know about things like RRSPs and TFSAs, doesn't want to know about them, put on its noise control headphones, shut the door of its office, and is currently drafting a email to HR complaining about a hostile work environment.

Similarly, just as a private contract between persons A and B cannot impose a duty on person C (although it can grant benefits), a treaty cannot oblige a country which is not a signatory to the treaty.

When does a treaty exist and come into effect and when does a nation become obliged to it?

It entirely depends on the internal laws of a nation.

A nation only enters into a binding treaty when it has performed the actions which law and custom of that nation require of it.

For example, in theory Her Majesty the Queen in right of Canada can enter the Dominion of Canada into a binding treaty but the constitutional practice is that it requires the consent of Parliament.

http://publications.gc.ca/Collection-R/LoPBdP/BP/prb0004-e.htm

https://treaty-accord.gc.ca/procedures.aspx?lang=eng

Similarly, the United States Constitution has explicit requirements about how to enter into a treaty. No matter how popular a particular president is, how many celebrities, news people, and other bien-pensants are in favour of something, and how many nations have signed an agreement, if the agreement has not been through that process then it isn't a treaty under United States law and no amount of snickering, mockery, and contempt alters that.


“A proof is a proof. What kind of a proof? It's a proof. A proof is a proof. And when you have a good proof, it's because it's proven.” Read more at: https://www.brainyquote.com/quotes/jean_chretien_145285

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    This does not answer the question. It does not explain what an MOU is, nor whether it is in any way binding. Much of it has mmore to do with politics or philosophy than with law. – David Siegel Jun 9 '19 at 14:31
  • " Is an MOU on trade equivalent to a Trade Agreement?" Answer: No, a MOU is a MOU; a treaty is a treaty. The idea of law being unrelated and unmoored from politics and philosophy is not necessarily accurate, certainly it is necessary to put the idea of a treaty and IR in general into the historic and thought contexts from which it emerges. – C'est Moi Jun 9 '19 at 14:48
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    A MOU is not equivalent to a treaty. A trade agreement is a treaty. The term MOU in commercial law and international law are analogue. MOU which, in commercial law, had the elements of a contract would be a contract because it would have the elements of a contract. Another way of thinking through the problem is – C'est Moi Jun 9 '19 at 19:22
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    A MOU is not equivalent to a treaty. A trade agreement is a treaty. The term MOU in commercial law and international law are analogue. MOU which, in commercial law, had the elements of a contract would be a contract. This is because it has the elements of a contract. Conversely, not all MOUs are contracts. – C'est Moi Jun 9 '19 at 19:30
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    A treaty is an agreement between two or more countries. A MOU can be a treaty, but only if the nations which are party to the treaty ratify the treaty. In other words, it is not binding on the nations unless they do the actions which their laws specify to ratify the treaty. These actions are separate from the MOU itself. – C'est Moi Jun 9 '19 at 19:30

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