A field experiment in Yokohama (japan) revealed that a macroscopic fundamental diagram (MFD) linking space-mean flow, density and speed exists on a large urban area. It was observed that when the highly scattered plots of flow vs. density from individual fixed detectors were aggregated the scatter nearly disappeared and points grouped along a well defined curve. Despite these and other recent findings for the existence of well-defined MFDs for urban areas, these MFDs should not be universally expected. In this paper we investigate what are the properties that a network should satisfy, so that an MFD with low scatter exists. We show that the spatial distribution of vehicle density in the network is one of the key components that affect the scatter of an MFD and its shape. We also propose an analytical derivation of the spatial distribution of congestion that considers correlation between adjacent links. We investigate the scatter of an MFD in terms of errors in the probability density function of spatial link occupancy and errors of individual links' fundamental diagram (FD). Later, using real data from detectors for an urban arterial and a freeway network we validate the proposed derivations and we show that an MFD is not well defined in freeway networks as hysteresis effects are present. The datasets in this paper consist of flow and occupancy measures from 500 fixed sensors in the Yokohama downtown area in Japan and 600 loop detectors in the Twin Cities Metropolitan Area Freeway network in Minnesota, USA. (C) 2010 Elsevier Ltd. All rights reserved.