"Yes, there's a clause in the contract, which is hard to take," Moyes, who took charge of Sunderland at the start of the season, told reporters.
"I would hope, in my time if I'd been manager I wouldn't have allowed a clause like that in there but it is and obviously we have to honour the contract.
"We hope Jermain stays. Everybody at the club wants him to stay, all the supporters want him to stay, but it has to be Jermain's decision what he does."
Defoe's goal-scoring form at the club has also earned him an England recall under manager Gareth Southgate and he scored on his return against Lithuania in a World Cup Qualifier earlier this year.
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Moyes believes Defoe's ambition to feature at the 2018 World Cup could also harm Sunderland's chances of keeping him at the club next season as they can no longer offer him top-flight football.
"That's a question for Jermain (on remaining at the club). Obviously he's got himself back in the England team," he added.
"He'll want to, I'm sure, push and try to be a member of the World Cup squad, and I think he'll be thinking, 'It's hard to do that if I'm a Championship player'."
The 54-year-old Scot, however, is hoping to make several changes to the squad as he targets immediate promotion back to the first division.
"The initial discussions (with club owner Ellis Short) went fine," Moyes said.
"I put in the plans of what I think it should be like and where it needs to go, and I'll meet Ellis at the end of the season and discuss it."
(Reporting by Hardik Vyas in Bengaluru)
