Is a Heads of Agreement legally binding?

It depends. A Heads of Agreement can include both binding and non-binding provisions. Clearly label which clauses are intended to be binding and seek counsel if you intend obligations to be enforceable.

Can the Heads be signed electronically?

Yes. Electronic signatures are generally enforceable under the ESIGN Act and state UETA laws when intent, consent, attribution, and record retention are met; follow platform audit-trail best practices.

Do I need a notary or witnesses?

Most Heads of Agreement do not require notarization, but attachments that create recordable interests (such as deeds) may require a notary or witnesses depending on state law.

What if a party wants changes after signing?

Amendments should be documented in writing and signed by authorized representatives. Avoid oral modifications and record any changes with dated signed amendments.

How do I withdraw or cancel a Heads of Agreement?

If not binding, withdrawal can be communicated in writing per the agreement's terms. For binding provisions, termination rights depend on the clause language and any agreed remedies.

How long should I keep signed copies?

Retain the executed Heads and related records for the active term plus recommended retention periods: at least three years for tax purposes and up to six years for HIPAA-regulated matters.

Electronic Signature
Templates
Miscellaneous
Business Heads of Agreement

Business Heads of Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

BUSINESS HEADS OF AGREEMENT

This Heads of Agreement is made and entered into on Effective Date: between:

Party A Name: Party A Address:

Party B Name: Party B Address:

WHEREAS

1. Party A is engaged in the business of providing goods and/or services as described in this document, and has represented to Party B that it has the experience and capacity to perform the work contemplated herein.

2. Party B wishes to engage Party A to perform certain services and both parties wish to record their agreed principal commercial terms in this Heads of Agreement, subject to the provisions below.

3. The parties acknowledge and agree that, except as expressly stated otherwise herein, this Heads of Agreement records the parties' current intentions and is not intended to create legally binding obligations for the full transaction. Notwithstanding the foregoing, the provisions titled Confidentiality, Governing Law, and any sections expressly identified as binding shall be binding on the parties.

SCOPE OF WORK

The scope of work to be performed by Party A for Party B is described below. Party A shall perform the services in a professional manner consistent with industry standards.

Detailed Scope of Work

PAYMENT TERMS

1. Fees: In consideration for the services described in Scope of Work, Party B shall pay Party A the fees set forth below.

Total Agreed Amount (USD) Payment Schedule Invoicing and Payment Method Late Payment

2. Taxes: All fees are exclusive of taxes. Each party is responsible for its own tax obligations arising under applicable law.

TERM AND TERMINATION

This Heads of Agreement commences on Start Date: and, unless earlier terminated in accordance with this Agreement, continues until End Date: .

Termination on Notice

Either party may terminate this Heads of Agreement for material breach by the other party if the breach remains uncured thirty (30) days after written notice specifying the breach, provided that termination shall be without prejudice to any accrued rights or liabilities.

CONFIDENTIALITY

1. Definition: "Confidential Information" means information disclosed by a party that is identified as confidential or that would reasonably be considered confidential under the circumstances, including but not limited to business plans, pricing, technical data and customer lists.

2. Obligation: Each party shall (a) keep the other party's Confidential Information confidential, (b) use such information solely for the purposes of performing obligations under this Heads of Agreement, and (c) not disclose such information to any third party except to employees, agents or advisors who have a need to know and who are bound by confidentiality obligations at least as protective as those set out herein.

Confidentiality Period

3. Exceptions: Confidential Information does not include information which (a) is or becomes public through no breach of this Heads of Agreement, (b) was rightfully in the receiving party's possession prior to disclosure, or (c) is required to be disclosed by law or regulation, provided the disclosing party is given prior notice where lawful to do so.

GOVERNING LAW

This Heads of Agreement shall be governed by and construed in accordance with the laws of , without regard to principles of conflict of laws. The parties submit to the non-exclusive jurisdiction of the courts of that jurisdiction for any disputes arising out of or in connection with this Heads of Agreement.

ENTIRE AGREEMENT

This Heads of Agreement constitutes the entire record of the parties' current agreement with respect to the matters set out herein and supersedes all prior discussions, representations and agreements between the parties relating to the subject matter, except that any definitive agreements executed by the parties in the future shall govern the final terms of the transaction.

If any provision of this Heads of Agreement is determined to be invalid or unenforceable, that provision shall be severed and the remaining provisions shall continue in full force and effect.

BINDING PROVISIONS

The parties expressly agree that the Confidentiality, Governing Law and any other clause expressly identified in writing as binding are legally binding obligations. All other provisions are intended as a statement of present intention and are non-binding until and unless incorporated into definitive executed agreements.

MISCELLANEOUS

Each party represents and warrants that it has full corporate power and authority to enter into this Heads of Agreement and to perform its obligations hereunder. Neither party may assign its rights or obligations under this Heads of Agreement without the prior written consent of the other party, except to a successor by way of merger or sale of substantially all assets.

Party A:

By:

Date:

Party B:

By:

Date:

What a Business Heads of Agreement Is and When Parties Use It

A Business Heads of Agreement is a short, written document that records the main terms parties have agreed in principle before drafting a definitive contract. It typically summarizes parties, commercial essentials, payment terms, exclusivity, confidentiality, and a timeline for negotiating the full agreement. Heads of Agreement can be binding on specific items (such as exclusivity or confidentiality) while leaving other obligations for detailed contract drafting. In commercial transactions it clarifies expectations, reduces misunderstanding, and sets a roadmap for counsel and deal teams as they finalize legal documentation.

Why use a Business Heads of Agreement early in negotiations

A Heads of Agreement provides clarity on core deal economics and commercial points without committing parties to full legal obligations prematurely. It helps align expectations, focus negotiations, and document items that should be settled before investing time and costs in drafting a final contract.

Who typically prepares and signs a Heads of Agreement

Use the document as a negotiation checkpoint; clearly label which clauses are binding and which remain subject to contract drafting to avoid unintended obligations.

Buyers and acquirers — corporate development or procurement teams that need a concise statement of deal terms and exclusivity windows.
Sellers and founders — to secure a commercial framework while counsel prepares definitive agreements and schedules.
Outside counsel and transaction lawyers — to capture negotiated points and identify items requiring legal drafting or due diligence.

Core components to include in a professional Heads of Agreement

A clear, well-structured Heads of Agreement lists parties, deal scope, key commercial terms, governance conditions, and next steps to guide drafting of the final contract.

Parties

Full legal names and entity types for each party, including jurisdiction of incorporation and primary business address for clear identification.

Scope

A concise description of the transaction or services being agreed, including deliverables, exclusions, high-level milestones, and any performance measures.

Commercial Terms

Price, payment schedule, currency, tax treatment, and any deposit or escrow mechanics that will carry forward to the definitive agreement.

Confidentiality

Any confidentiality obligations or NDA cross-reference, including duration and permitted disclosures during diligence and drafting.

Exclusivity

Whether parties agree to an exclusivity or no-shop period, its duration, and remedies for breach during the negotiation window.

Next Steps

Timeline for drafting, due diligence responsibilities, signing deadlines, and which items are expressly binding versus subject to final contract.

Step-by-step: preparing and executing a Heads of Agreement

Follow a simple sequence to draft, review, and formalize a Heads of Agreement that preserves negotiation flexibility while protecting core rights.

01

Draft core terms: Summarize parties, price, scope, and timelines in plain language.
02

Mark binding clauses: Identify confidentiality, exclusivity, and any obligations that will be binding now.
03

Counsel review: Have legal counsel confirm chosen language and risk allocation.
04

Execute and circulate: Obtain signatures and distribute executed copies to all stakeholders.

Configuring an online workflow for completion and signatures

When using an e-signature workflow, configure fields, authentication, and reminders to match the deal's risk and complexity.

Field	Configuration
Signature Type	Choose electronic signature or digital signature per transaction requirements.
Authentication	Use email verification or SMS code for signer attribution; escalate to KBA if needed.
Conditional Fields	Show negotiation items only when particular options are selected.
Reminders & Deadlines	Set automated reminders and a final signing deadline to preserve negotiation timelines.

Where to send, file, or route the executed document

Decide a single document custodian and circulation path to ensure consistent recordkeeping and access for counsel and finance teams.

Primary Custodian: Designate legal counsel or corporate secretary to hold originals and control versions.
Internal Distribution: Circulate executed copy to finance, procurement, and project leads for implementation.
External Filing: Record only if the heads contain terms requiring public filing (rare).
Document Repository: Store signed copies in a secure, access-controlled location.

Digital signing and eSubmission considerations

Preserve the audit trail, secure storage, and access controls to support enforceability and regulatory compliance.

Authentication Level: Email or SMS
Audit Trail: IP and timestamps
Storage Format: PDF/A preferred

Essential information fields to capture

Party Names: Exact legal name

Addresses: Street, city, state, ZIP

Contact Details: Email and phone

Deal Value: Currency and amount

Key Dates: Effective and expiry dates

Signatures: Signer name, title, date

Common mistakes to avoid when preparing a Heads of Agreement

Failing to state which provisions are binding versus non-binding, creating unintended enforceability and litigation risk if parties disagree later.
Using ambiguous commercial terms or undefined percentages for payments, which leads to disputes during definitive agreement drafting and execution.
Overlooking required approvals and authorizations (board resolutions, third-party consents), which can invalidate promised performance or delay closing.
Neglecting to include a clear timeline for final contract execution, causing indefinite negotiation and potential loss of exclusivity or market opportunity.

Risks and potential consequences of an incorrect Heads of Agreement

Contractual Risk: Unintended binding promises

Regulatory Risk: Noncompliance with industry rules

Tax Exposure: Incorrect payment characterization

Operational Delay: Missed milestones or deadlines

Litigation Cost: Legal fees and damages

Reputational Harm: Partner relationship damage

Real-world examples of Heads of Agreement in practice

These short examples show how businesses use Heads of Agreement to lock in key terms while the parties finalize full contracts.

Optica Ventures LLC

Optica documented principal deal terms to align internal stakeholders and external partners.

The heads outlined price and exclusivity during negotiation.
As Brian Fitzgibbons, COO, noted: "The interface is simple and easy-to-use for our team; more importantly, it is just as easy for our customers."

Martin Properties

A real estate operator summarized payment schedule and due diligence timelines.

The heads secured an exclusivity window for the buyer.
Tim Martin, Founder, explained: "I can process and execute all of these documents online with 100% compliance and built-in security."

Who is typically authorized to sign

Authorized Officer

A corporate officer (CEO, CFO, or other designated signer) with board authorization typically signs for corporations; confirm authority via board minutes or resolution.

Managing Partner

In partnerships or small businesses, a managing partner or owner with written delegation signs; verify authority to bind the entity before execution.

Typical timelines and deadlines to include

Include specific dates for negotiation windows, milestones, and final signature to avoid misunderstandings and preserve exclusivity rights.

Negotiation Window:

Specify number of days to finalize definitive documents

Exclusivity Period:

State start and end dates for any no-shop obligation

Signing Deadline:

Enter the last date for executing the final agreement

Effective Date:

Set the date when obligations commence

Performance Milestones:

List key delivery dates and acceptance criteria

Comparison: common eSignature vendor starting prices and capabilities

Basic pricing and capability indicators for common eSignature solutions; signNow is listed first for comparison. Confirm plan details directly with each vendor for specific functionality.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by plan	Varies by plan	Varies by plan	Varies by plan
Bulk Send	Yes	Yes	Yes	Yes	Varies
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently asked questions and common issues

Answers to frequent questions about enforceability, e-signing, witness and notary needs, and how to amend or withdraw a Heads of Agreement.

Need help? Contact support

Is a Heads of Agreement legally binding?
It depends. A Heads of Agreement can include both binding and non-binding provisions. Clearly label which clauses are intended to be binding and seek counsel if you intend obligations to be enforceable.
Can the Heads be signed electronically?
Yes. Electronic signatures are generally enforceable under the ESIGN Act and state UETA laws when intent, consent, attribution, and record retention are met; follow platform audit-trail best practices.
Do I need a notary or witnesses?
Most Heads of Agreement do not require notarization, but attachments that create recordable interests (such as deeds) may require a notary or witnesses depending on state law.
What if a party wants changes after signing?
Amendments should be documented in writing and signed by authorized representatives. Avoid oral modifications and record any changes with dated signed amendments.
How do I withdraw or cancel a Heads of Agreement?
If not binding, withdrawal can be communicated in writing per the agreement's terms. For binding provisions, termination rights depend on the clause language and any agreed remedies.
How long should I keep signed copies?
Retain the executed Heads and related records for the active term plus recommended retention periods: at least three years for tax purposes and up to six years for HIPAA-regulated matters.

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