Question 1

Is an MOU legally binding in Canada?

Accepted Answer

Generally, an MOU is not legally binding. However, if the language demonstrates intent to be bound and consideration is exchanged, Canadian courts may find it enforceable.

Question 2

Do I need an MOU or a contract?

Accepted Answer

Use an MOU for preliminary understandings or frameworks before a formal contract. Use a binding contract when parties are ready to commit to specific obligations with legal consequences.

Question 3

Are there tax implications for an MOU?

Accepted Answer

If consideration (payment) is exchanged under the MOU, GST/HST may apply to the transaction. Consult a tax professional for specific CRA implications.

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