Association work depends on collaboration. A conversation over lunch becomes a joint program, a familiar vendor proposes a new engagement, or a destination offers a framework for a future convention. As those discussions develop, someone often suggests documenting the arrangement in a memorandum of understanding (MOU), letter of intent (LOI), or letter of agreement (LOA) rather than a more formal agreement.
The appeal is understandable: a shorter, less formal document can seem more approachable. But an approachable document is not necessarily a complete one, and a familiar acronym does not establish what the parties have agreed to do. The document’s language, the parties’ objectively expressed intent, the surrounding circumstances, and applicable law—not its title alone—determine its legal effect. An agreement may be binding, nonbinding, or binding only as to particular provisions.
Understanding that distinction helps associations choose a document that fits both the stage of the relationship and the responsibilities they are prepared to assume.
MOU: Documenting an Initial Understanding
An MOU can serve as a written record of an initial conversation about collaboration—the more organized equivalent of informal notes from a productive lunch meeting. Two associations considering a joint educational program, for example, might use an MOU to identify their shared objective, outline anticipated roles, and record the issues they still need to resolve.
At that stage, the document should describe what the parties intend to explore, not authorize activities that require enforceable protections. As a best practice, associations should keep an MOU preliminary and expressly nonbinding. They should not exchange money or license intellectual property under that preliminary framework. Before either association pays program expenses, permits use of its content or trademarks, or undertakes substantive performance obligations, the parties should enter into an appropriately drafted definitive agreement. Any confidentiality protection needed during discussions should likewise be addressed through an appropriate binding agreement.
That recommendation concerns how associations should use MOUs; it does not mean that every document bearing the title is legally nonbinding. An MOU’s wording can create enforceable obligations despite its label, and the absence of payment does not eliminate legal or operational risk. Its preliminary purpose should therefore be explicit, along with the agreement and approvals required before the collaboration moves forward.
LOI: Establishing a Roadmap for Negotiations
While an MOU can capture an early understanding about collaboration, an LOI typically brings more structure to negotiations over a proposed transaction. An association exploring a merger, negotiating a headquarters lease, or developing a multiyear convention arrangement may use an LOI to establish proposed business terms before investing in a definitive agreement.
The important distinction is between agreeing on a direction for negotiations and committing to complete the transaction. An LOI may leave the proposed transaction nonbinding while creating binding obligations concerning confidentiality, exclusivity, expenses, or the negotiation process. Those provisions should be clearly distinguished from tentative business terms, with any required approvals and conditions to becoming bound expressly identified.
Two decisions applying Illinois law illustrate why this precision matters. In Quake Construction, Inc. v. American Airlines, Inc., the Illinois Supreme Court found an LOI ambiguous about whether the parties intended to be bound, despite references to a later formal contract. The court required further proceedings to determine that intent; it did not decide that an enforceable contract existed. 565 N.E.2d 990 (Ill. 1990). By contrast, in Empro Manufacturing Co. v. Ball-Co Manufacturing, Inc., the Seventh Circuit, applying Illinois law, held that the LOI did not commit the parties to complete the proposed asset sale because its language and structure reserved further agreement and approvals. 870 F.2d 423 (7th Cir. 1989). These cases concern construction and an asset sale, respectively, rather than association or convention agreements, but they illustrate the importance of clearly expressing whether preliminary terms create binding obligations.
For meeting professionals, the practical questions are equally concrete: Is convention space actually being held? When does the hold expire? Are deposits, cancellation obligations, or exclusivity provisions binding now, or only after another agreement is signed? A preliminary understanding with a destination organization should not be assumed to bind participating hotels or venues. An LOI should clarify the next stage of negotiations, not leave the association guessing about its present commitments.
LOA: A Shortcut That Warrants Caution
An LOA differs from those preliminary tools because it commonly seeks to establish the contractual relationship itself, using letter format. Although that format can produce an enforceable agreement, enforceability alone does not mean the document adequately protects the association.
The Association Law Group LLC’s experience has identified poorly drafted LOAs as a recurring source of contract disputes. The reasoning behind their use is familiar: the parties fear that legal language will discourage collaboration, rely on their previous working relationship, or consider a more comprehensive agreement unnecessarily formal. Those assumptions can lead an organization to prepare a short letter without legal counsel, believing it has adequately documented the relationship while leaving important expectations unresolved.
Those omissions tend to matter when circumstances change. A speaker cancels, a consultant delivers work the association cannot use, or an event technology platform fails. The parties then discover that their approachable letter does not adequately address cancellation, ownership of work product, performance standards, responsibility for losses, or termination rights. Prior dealings and goodwill do not supply those missing answers.
For that reason, associations should use LOAs sparingly, in carefully defined circumstances, and with legal review—not as the routine alternative to a comprehensive agreement. Even a modest engagement can involve significant intellectual property, privacy, cancellation, or liability concerns. A low fee does not necessarily mean low risk.
If an LOA approaches three (3) pages, it is worth asking whether an appropriate services agreement, speaker agreement, or other definitive contract would serve the parties better. A formal agreement can itself be clearly written and only three pages long. Three pages is not a legal threshold; it is a practical prompt to reconsider what the letter format accomplishes. For a recurring relationship, a master services agreement (MSA) with an appropriate statement of work describing the specific services and deliverables may be useful; a stand-alone agreement may better suit a one-time engagement.
The concern, ultimately, is not that LOAs are inherently invalid. It is that their perceived convenience can encourage incomplete drafting. The objective should be a clear, appropriately structured agreement—not the shortest document the parties are willing to sign.
Clear Agreements Support Collaboration
The same principle connects all three documents: the form should serve the relationship, rather than obscure its obligations. An MOU can record an expressly nonbinding preliminary understanding, an LOI can structure negotiations, and an LOA may have a limited role in carefully defined engagements. None should become a shortcut around the protections the association actually needs.
As a relationship moves from discussion to performance, the agreement should move with it. Before money changes hands, intellectual property is licensed, or substantive work begins, the parties should establish the necessary binding terms, confirm signing authority and required approvals, and review incorporated proposals, online terms, and attachments. Length and formality alone do not guarantee protection; the substance must fit the engagement.
A well-drafted agreement is not a statement of distrust. It is a shared understanding of responsibilities and a framework for addressing changes, cancellation, and disputes. Clear terms cannot prevent every disagreement, but they can help preserve the very collaboration that an informal shortcut was intended to encourage.
Disclaimer: This article provides general information about U.S. contract principles and association governance practices, not legal advice. Applicable requirements and legal outcomes vary by jurisdiction, document, and circumstances. Reading this article does not create an attorney-client relationship with The Association Law Group LLC or its attorneys. Consult your own counsel before acting. Do not submit confidential information in response to this article or through a website form unless the firm has expressly authorized submission through an appropriate confidential channel.
