On the question of whether the terms agreed between the parties were sufficiently secure to constitute a contract, the judge stated: “… the essential information concerning each of the contract officials was presented with sufficient certainty in the signed document in order to conclude a binding agreement. The fact that more details were sought and that the documents submitted to the agreement contained variations in the manner in which the terms heads came into force does not change that certainty. The reality is that an agreement by the heads of state or government may or may not be binding. In general, however, the objective is that the contract is not binding on the “key conditions of a proposed agreement between the parties” but on issues such as “exclusivity, confidentiality, duty of care and intellectual property.” Heads of Agreements may be binding or non-binding depending on the language used, but are not universally binding. However, some aspects, such as intellectual property, exclusivity, confidentiality and non-invitations, are generally binding, even if the deadlines are reasonable. If a contract head document is written to be binding, it can be the result of problems. On May 9, 2013, Sackar J of the NSW Supreme Court reaffirmed the principles of when heads of agreements (HOA) will be legally applicable and binding for the parties. In this case, Sackar J. found that the heads of agreements were legally enforceable and binding because: the question the Tribunal has to ask itself is whether the heads of contract constitute a legally binding contract between the parties, as the applicants assert, or whether that document was merely intended to record general terms of transaction that would serve as the basis for a final and binding settlement. , as the defendant argued.
This assertion arose from a settlement of disputes between family members over their respective rights to exploitation. The mediation agreement stated that an agreement was binding only if it had been written down and signed by the parties or on behalf of the parties. Sackar J. also cited several cases concerning the importance of the courts in order to examine the context in which a written agreement had been reached. The term “Heads of Agreement” is most commonly used in Australia, New Zealand and the United Kingdom. It is a widespread illusion that if terms are agreed, there will be no legally enforceable agreement. There are many examples where terms can be agreed, but they are not considered by the parties. However, it would be wrong to think that this could never be the case.
It all depends on what has been agreed, the intention of the parties and whether what has been agreed is safe enough to be legally applicable. A recent Australian case before the NSW Supreme Court is a timely reminder that the parties should ensure that, before leaving mediation, the development of an agreement on the intentions of their right is immediately linked to their terms. Following the mediation, several additional points that were not in the spirit of the mandates were discussed and the final settlement agreement was blocked. After a few months, the accused`s lawyers sent an e-mail confirming that they had no longer received notice and stated that the accused did not consider these terms to be binding. The accused filed an application for the heads of the agreement. The applicant submitted that he never intended to sign the approval decisions and that the contract was merely an “agreement in principle” as they required the parties to accept approval of decisions requiring court approval. Once both parties have reached a broad consensus on a partnership or transaction and have signed a contractual document, the next step is to involve lawyers and accountants to reduce the details.