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Pre Contract Agreement for Malaysia

Pre Contract Agreement Template for Malaysia

A Pre Contract Agreement under Malaysian law is a formal document that establishes the framework and ground rules for negotiations between parties prior to entering into a final contract. This document, governed by Malaysian contract law including the Contracts Act 1950, sets out key terms such as confidentiality obligations, exclusivity periods, and negotiation protocols. It provides legal protection during the negotiation phase while parties exchange sensitive information and conduct due diligence. The agreement typically includes provisions for cost allocation, timeline commitments, and specific Malaysian legal requirements for contract formation and enforcement.

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What is a Pre Contract Agreement?

The Pre Contract Agreement is a crucial document used in Malaysian business transactions where parties need to establish a structured framework for negotiations before finalizing a main agreement. It becomes particularly relevant in complex commercial transactions where significant due diligence, information exchange, or lengthy negotiations are anticipated. The document, governed by Malaysian law, typically includes provisions for confidentiality, exclusivity, cost allocation, and good faith negotiations. It protects parties' interests during the negotiation phase while allowing for necessary information exchange and due diligence. This type of agreement is especially important in Malaysia's business environment where cross-border transactions are common and regulatory compliance needs careful consideration. The Pre Contract Agreement helps prevent misunderstandings and provides legal recourse if negotiations break down improperly.

What sections should be included in a Pre Contract Agreement?

1. Parties: Identification and details of all parties entering into the pre-contract agreement

2. Background: Context of the proposed transaction or relationship and purpose of entering into the pre-contract agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Duration and Termination: Period for which the pre-contract agreement remains valid and circumstances for termination

5. Confidentiality: Obligations regarding the protection and non-disclosure of confidential information exchanged during negotiations

6. Exclusivity: Terms preventing parties from engaging in parallel negotiations with other parties

7. Costs and Expenses: Allocation of costs incurred during the negotiation process

8. Good Faith Obligations: Commitment to negotiate in good faith and general conduct expectations

9. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for dispute resolution

10. Entire Agreement: Confirmation that this document represents the entire agreement regarding pre-contractual matters

What sections are optional to include in a Pre Contract Agreement?

1. Break Fee: Include when there's a need to specify compensation if one party withdraws from negotiations

2. Intellectual Property Protection: Include when significant IP will be disclosed during negotiations

3. Regulatory Compliance: Include when the proposed transaction requires specific regulatory approvals or notifications

4. Due Diligence Process: Include when detailed due diligence procedures need to be outlined

5. Non-Competition: Include when parties need protection against competitive activities during negotiations

6. Binding/Non-Binding Provisions: Include when certain provisions need to be specifically identified as binding or non-binding

7. Warranties: Include when specific representations about authority to negotiate or status of assets are required

What schedules should be included in a Pre Contract Agreement?

1. Schedule 1 - Timeline: Proposed timeline for negotiations and key milestones

2. Schedule 2 - Authorized Representatives: List of authorized representatives from each party who will conduct negotiations

3. Schedule 3 - Confidential Information: Specific details of what constitutes confidential information

4. Schedule 4 - Due Diligence Requirements: List of documents and information required for due diligence

5. Appendix A - Form of Non-Disclosure Agreement: Template NDA if separate confidentiality agreements are required

6. Appendix B - Term Sheet: Initial terms and conditions proposed for the final agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Ƶ

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions






















Clauses























Relevant Industries

Manufacturing

Real Estate Development

Technology and Software

Financial Services

Energy and Utilities

Healthcare

Telecommunications

Construction

Mining and Natural Resources

Retail and Consumer Goods

Agriculture

Education

Transportation and Logistics

Relevant Teams

Legal

Business Development

Corporate Strategy

Finance

Operations

Compliance

Risk Management

Commercial Operations

Corporate Secretariat

Mergers and Acquisitions

Investment

Relevant Roles

Chief Executive Officer

Managing Director

Chief Legal Officer

Legal Counsel

Business Development Manager

Chief Financial Officer

Commercial Director

Contract Manager

Corporate Secretary

Investment Manager

Project Manager

Risk Manager

Compliance Officer

Operations Director

Strategy Director

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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