Memorandums of Understanding – are they legally enforceable? Cohen v River Rock European [2025] EWHC 845

The 2025 High Court case of Cohen & Ors v RiverRock European Capital Partners LLP reinforced the principles governing the enforceability of MOUs. 

Putting MoUs in context

A memorandum of understanding (‘MoU’) is often used in commercial transactions where the parties seek to set out the key commercial or legal points prior to entering into lengthy and sometimes costly negotiations on a long form agreement. They are usually short documents, around 4 to 10 pages, and they are often expressly stated to be non-binding, save in relation to certain obligations such as non-solicitation, confidentiality or governing law.

What were the facts of the case?

In Cohen v RiverRock, the MoU in question was entered into to facilitate an urgent cash injection into the defendant firm, RiverRock, by the three claimants who would, in exchange, receive equity in the firm. The sum of €3 million (the 'Advanced Payment') was advanced in 2 instalments, based on the terms of the MOU, before the completion of fuller "final documentation" anticipated by the parties.​

However, no further documentation followed, the deal fell through, and the claimants sought repayment of the Advanced Payment, based on the MOU's repayment terms. ​RiverRock contested the repayment, arguing primarily that the MOU's terms were too uncertain or materially inchoate (in the sense of being 'subject to contract') to be legally binding. On the other hand, they argued that the terms pursuant to which the Advanced Payment was made were legally binding and enforceable.  ​

Before considering the judgment of the court, it is useful to view the relevant language of the introductory paragraph of the MoU (set out below). 

The judge noted that whilst every page of the MOU - except for the first page - was marked “Subject to contract” and “Strictly private and confidential”, paragraph B above clearly states that the MoU is legally binding and is intended to create contractual obligations on the parties. It also expressly states that the payment obligations under the Advanced Payment section are legally binding and not subject to the execution of final documentation. However, the introductory paragraph made no reference to the repayment terms being legally binding; these terms were set out in the body of the MoU and provided various express conditions, notably that following service of a repayment notice, repayment would be due at least 14 days after delivery of the repayment notice, together with 10% interest.

The judgment of the court

So, were the repayment terms legally binding? The Court granted summary judgment in favour of the claimants, ruling that the MoU did contain legally binding repayment obligations. The court determined that the repayment terms were sufficiently certain, self-contained and intelligible to constitute an enforceable obligation. This was the case even though the MOU also contemplated more formal documentation being executed later. 

The judge noted that the defendants had made much of the "subject to" language in the introductory paragraphs A and B as well as the " Subject to contract" rubric at the top of the MOU, save for its first page. It was highlighted that it is, of course, possible for some parts of a written agreement to be legally binding and others not, including because they are subject to contract or insufficiently certain. This wording is explicable in the MOU itself on the basis that final documentation was essential to affect the equity investment into RiverRock. Such documentation would need to put flesh on terms such as "representations and warranties" referred to in the final sentence of paragraph B, for example.

The court noted the contrast, however, between these high-level or placeholder terms, and the detailed repayment regime outlined later in the MOU. This regime, it said, “is a self-contained code for the fate of the Advance Payment. It is sufficiently certain and complete to constitute or contain a legally binding repayment obligation…. The fact that it is self-sufficient in this sense, i.e. intelligible and workable in its own terms and a natural correlative to or component of the primary financing obligation in respect of the Advance Payment, is a powerful indicator against it being subject to contract”.

Key takeaways

1. To avoid future uncertainty, always expressly state in an MOU which areas of the MOU are intended to be legally binding, and which are not.
2. Terms should not be both ‘subject to contract’ and be intended to be legally binding as these two terms are arguably conflicting.
3. Be cautious about articulating full terms which are not intended to be legally binding. If parties choose to articulate complex details, but they are intended to be non-binding terms, make sure it's clear that those terms are non-binding. Notably, in the Cohen case, the judge noted that “If the repayment regime was not legally binding, then what was its point? There was no need for any fuller articulation of it in the Final Documentation because it works on its own terms."

English contract law is at the heart of much of the work that lawyers in our London office do. To ensure we keep up to date with developments, we continuously monitor new contract cases and identify any that we think will be relevant to our commercial and disputes lawyers. For more information on this, or any other recent decision, please contact Esther Johnson or your usual Bird & Bird contact.