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Heads of Agreement

Often, negotiations take place between parties where the agreement will be non-standard. It is not possible for the parties to use a standard form of agreement, and eventually what has been agreed will need to be tidied up and formalised by lawyers. In the meantime some way has to be found of recording the discussions, without binding the parties.

A typical solution is to draw up a document called a 'Heads of Agreement'. This is an agreement with two main characteristics. It is not formal in style, and it is not (usually) binding. It is vital however that the parties be clear as to wheher and pecisely how far they intend that the discussions should be binding.

Such documents can be extremely useful. They can take a standard outline form, and this can serve as a useful reminder to the parties to cover all the things which will be needed. Simple reference can be made to the need for certain standard clauses ('boilerplate clauses').

Often there are some elements which will need to be binding immediately. Depending upon the circumstances, this can be best in a separate 'short-form' agreement. This can often apply where, for example, one party has ongoing expenses which the other will agree to bear in any event.

Particular care needs to be taken to ensure that some parts of these documents are properly worded, however informally the rest is phrased. Different and particular issues can arise, for example, where representations are made about the prospects of a certain proposal, or where a sale of land may be involved.

The temptation is always there to push the agreement too far forward. However experienced the parties are, the issues can be complex, and one party may be more experienced than the other. Using this method, 'space' can be left for the parties to amend elements of the agreement having taken separate legal advice.

We can provide standardised and simple forms of 'agreement outlines' which can be used for this purpose, and are ready to discuss a negotiation with clients first to help to identify special issues which will need to be addressed by the parties.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
All information on this site is in general and summary form only. The content of any page on this site may be out of date and or incomplete, and you should not not rely directly upon it. Take direct professional legal advice which reflects your own particular situation.
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18 October 2013 383 18 October 2013