Heads of Agreement & MOU

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Heads of Agreement & MOU

Memorandum of Understanding & Heads of Agreement

Heads of agreement & MOU are pre-contract documents used prior to entering into a more ‘formal’ contract. Non-disclosure agreements are also used as pre-contractual documents and are covered in a separate collection dealing with confidentiality (see Confidentiality Agreements).

‘Heads of agreement’ (HOA) and ‘memorandum of understanding’ (MOU) are terms used interchangeably to cover any agreement that is entered into prior to entering into a contract. This may be desirable where the parties are in the early stages of negotiation and wish to confirm the basic points of their agreement.  HOA’s and MOU’s are most commonly used in the following circumstances:

  1. Commercial Leasing
  2. Sale of business
  3. Joint ventures
  4. Sale of shares
  5. Distribution Agreements / supply agreements / manufacturing agreements

The Heads of Agreement, although not a fully fledged contract, can still contain binding commitments.

Heads of Agreement: General

A Heads of Agreement precedent for general use. Includes provisions relating to:

  • Subject to contract
  • Payment of costs
  • Terms to be included in contract
  • Form of contract included as Annexure  A

4 pages long.

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