Heads of agreement

Heads of agreement is a pre-contract document recording the main commercial terms the parties have agreed before a full contract is drawn up: vessel, price, delivery, and key conditions. In ship sale and newbuilding work it captures the recap that brokers have negotiated and frames the memorandum of agreement or shipbuilding contract to follow. Whether it binds depends on its wording: terms marked subject to contract or subject to details are not yet binding, while an unqualified heads of agreement can be enforceable. Brokers use it to lock the deal shape while lawyers paper the detail.