Heads Of Agreement Notes
This is a sample of our (approximately) 3 page long Heads Of Agreement notes, which we sell as part of the Private Acquisitions Notes collection, a Distinction package written at Cambridge And Oxilp And College Of Law in 2017 that contains (approximately) 339 pages of notes across 85 different documents.
The original file is a 'Word (Docx)' whilst this sample is a 'PDF' representation of said file. This means that the formatting here may have errors. The original document you'll receive on purchase should have more polished formatting.
Heads Of Agreement Revision
The following is a plain text extract of the PDF sample above, taken from our Private Acquisitions Notes. This text version has had its formatting removed so pay attention to its contents alone rather than its presentation. The version you download will have its original formatting intact and so will be much prettier to look at.
HEADS OF AGREEMENT ("LETTER OF INTENT") Purpose
to provide written confirmation of the main terms agreed in principle, and to focus the minds of the parties on the commercial deal they believe has been struck.
sets out basis on which they are prepared to proceed, without first committing cost and time of full investigation into target assets of company.
Not meant to be legally binding, but are instead though to be "morally binding" However, legal force is given to certain clauses which the parties intend to be binding (e.g. lock-out, confidentiality, or break fee arrangements). Binding contract?
(a) has there been offer and acceptance?
(b) is there an intention to be legally bound? presumed for commercial relationships (c) is there consideration (which is not past)?
a. normally DD costs paid for by B b. further confidential information about the company (past info given by S won't suffice) "agreement to agree" is not legally binding, but it may be in some civil jurisdictions Drafting:
avoid language which is certain (e.g. "the following sets out the agreement between B and S" or "B shall")
express the letter as conditional on the execution of a subsequent binding agreement
expressly provide that the document "is not intended to be binding upon Signatories except where expressly provided otherwise"; and then expressly state in the clauses which are intended to be legally binding that they are legally binding. Duty to negotiate in good faith?
Provides a remedy should the client withhold critical pieces of information which would alter the opinion of the other party, or if they withdraw from the precontractual negotiations without good reason. o "negative interest damages" (i.e. damages that would put the other party in the position that it would have been in had the negotiations not taken place)
Is there a duty?
o Rome II provides that the choice of law provision, provided it has been freely negotiated, will determine the law for any connected non-contractual obligations. o If the letter of intent includes a clear selection of English law as the governing law, this would avoid the obligations of good faith.
Recommended to include a clause providing that, until signing of agreement, the parties are entitled to break off negotiations at any time without incurring any liability to the other
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