Heads Of Agreement


Heads of the agreement is a legal document that consists of terms agreed upon by two parties that are still undergoing negotiations. It is a draft of all the conditions to be added in the contract. Head of agreements are legally binding but are often mistaken to be non-binding which may cause disputes to be discussed further in detail.

What Is Heads Of Agreement?

Heads of the agreement is a contract containing the terms agreed upon by both entities involved. Its made before final business conditions that will act as a framework to make the final agreement. Undertaking heads of agreement helps in resolving the financial issues or confidentiality before getting into a legal contract with the other. At the same time, it shows faith in the partner by getting into a contract with him.

There is a difference in opinion on whether the heads of agreement is legally binding or not. Some people believe the agreement is legally enforceable and, some say the opposite. But unless mentioned otherwise in the contract, heads of agreement can be legally binding if the terms proposed are mentioned correctly and is signed by both entities. Thus, it is essential to inspect the agreement thoroughly before signing a heads of agreement.

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Is A Heads Of Agreement Legally Binding?

There has been a lot of speculation about whether a head of agreement is legally binding or not. Though many people believe that it is not enforceable, there is evidence to suggest otherwise. The agreement can be deemed legally binding if the terms proposed are agreed upon and signed by both parties, and there is no mention that the contract is not legally enforceable.

There are a set of conditions to be fulfilled for heads of agreement to be legally binding. John Sackar, the judge of New South Wales Supreme Court stated the same in a case of a dispute regarding heads of agreement. He considered several conditions before ruling a judgement including the fact that both the parties had signed the agreement which conveys that the parties involved have entered into the contract willingly. The terms were agreed by both entities after a series of negotiations that were overseen by legal counsel.

Thus, special attention needs to be given before signing a heads of agreement as assuming that it is not binding can cause unforeseen issues. The binding status of the agreement depends on the decision taken by the parties involved in the transaction, to be on the safer side and prevent fraud, one should give serious thought before getting into a heads of agreement.

How Can Our Commercial Lawyers Help You With Heads Of Agreement?

How Can Our Commercial Lawyers Help You With Heads Of Agreement?


Lawyers and solicitors at Commercial Law Perth will assist in the formulation of the heads of agreement. The contract itself requires specific care and attention while citing the terms proposed and agreed upon by the parties involved. The intricate details and the nature of the agreement can be overwhelming for a person with a non-legal background. It is beneficial for the people involved to carry out the negotiations and term propositions while being overseen by a legal team. It ensures the authenticity of the agreement and provides a convenient way out for the parties. Having the support of a lawyer will also help in resolving disputes in relatively less time and in laying out the terms effectively after a lengthy negotiation.

How Can Our Commercial Lawyers Help You With Heads Of Agreement?
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