Legal templates

3 Types of Heads of Agreements

A “heads of” agreement is a non-binding document that outlines the basic terms of a tentative partnership agreement or transaction. Also known as a “heads of terms,” or  “letter of intent”, a heads of agreement marks the first step on the path to a full legally binding agreement or contract and a guideline for the roles and responsibilities of the parties involved in a potential partnership before any binding documents are drawn up. Such a document is commonly used in commercial transactions, such as the purchase of a business.

The Memorandum of Understanding.

A memorandum of understanding (MOU) is a type of heads of agreement that is often used as a preliminary step before entering into a formal contract. An MOU is usually drafted by lawyers and is not legally binding. However, it does provide some protection against future disputes.