modus means mode, way. vivendi means living. Together, way of living, implies an accommodation between disputing parties to allow life to go on. It usually describes informal and temporary arrangements in political affairs. For example, when two sides reach a modus vivendi regarding the territories disputed, even though they may not agree with each other's values or attitude, they have worked out a way of living with their differences. This sense of the term has been used as the keystone of the political philosophy espoused by John Gray.
In the diplomatic arena, a modus vivendi is an instrument recording an international agreement of temporary or provisional nature intended to be replaced by an arrangement of a more permanent and detailed character, usually a treaty. It is customarily made in an informal way, and never requires legislative or parliamentary ratification. Armistices and instruments of surrender are modi vivendi.
Modus vivendi is a key component to Taiwan president Ma Ying Jeou's diplomatic strategy for revived cross-Strait relations and international recognition [1].
[1] Ma Ying-jeou: KMT foreign policy paper Section IV (rsdetsch)