Heads Of Agreement

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DEFINITION of 'Heads Of Agreement'

A non-binding document outlining the main issues relevant to a tentative partnership agreement. Heads of agreement represents the first step on the path to a full legally binding agreement or contract, and serves as a guideline for the roles and responsibilities of the parties involved in a potential partnership before any binding documents are drawn up.

INVESTOPEDIA EXPLAINS 'Heads Of Agreement'

As a Heads of Agreement document is only meant to serve as a guideline, it may not be comprehensive enough to cover all the bases relevant to a binding contract. While the parties involved may find broad agreement on the topics covered in a Heads of Agreement document, the devil may be in the details. In other words, the minutiae that must perforce be spelt out in a binding partnership agreement or contract may not be to the liking of all the parties involved in the partnership, which could derail their efforts to work together.

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