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A Preliminary Agreement sets out the basic terms two parties plan to include in their final contract, while they work out the details. It's commonly used in NZ business deals, property transactions, and commercial partnerships when parties want to show their serious intent but aren't quite ready for a binding contract.

These agreements typically outline key points like price, timeframes, and major conditions, while marking which parts are binding (like confidentiality) and which aren't. Under New Zealand contract law, they're also called "heads of agreement" or "memoranda of understanding," though their enforceability depends on how they're written and the parties' clear intentions.

Use a Preliminary Agreement when you need to lock down core deal terms while still working through complex details. This works especially well for major NZ property developments, business sales, or joint ventures where both parties want to show commitment but need time for due diligence or regulatory approvals.

It's particularly valuable when dealing with time-sensitive opportunities, multiple stakeholders, or complex negotiations that could take months to finalize. The agreement helps maintain momentum by capturing key points early, protecting confidential information, and creating a clear framework for moving forward���while giving everyone breathing room to sort out the finer points.

• Basic Term Sheets: Outline essential deal points and timeline without binding commitments, common in smaller business transactions
• Binding Framework Agreements: Include enforceable confidentiality and exclusivity clauses while keeping commercial terms non-binding
• Conditional Preliminary Agreements: Set specific conditions that must be met before moving to final contracts, popular in property developments
• Memoranda of Understanding (MOU): Less formal agreements often used for joint ventures or strategic partnerships
• Hybrid Agreements: Mix binding and non-binding elements, typically used in complex commercial deals requiring staged completion

• Business Owners: Often initiate Preliminary Agreements when selling companies or forming partnerships, setting core terms while details are finalized
• Property Developers: Use them to secure development rights or negotiate with contractors while awaiting council approvals
• Corporate Lawyers: Draft and review these agreements to protect client interests and ensure enforceability of key provisions
• Commercial Real Estate Agents: Facilitate preliminary agreements between buyers and sellers during complex property transactions
• Investment Firms: Employ them when structuring deals to outline investment terms while conducting due diligence

• Core Terms: Identify essential deal points like price, timeframes, and key deliverables that both parties have agreed to
• Party Details: Gather full legal names, addresses, and authority to sign for all involved entities
• Binding Elements: Decide which provisions need immediate legal effect (like confidentiality) versus future negotiation
• Conditions: List any prerequisites, regulatory approvals, or due diligence requirements needed before final agreement
• Timeline: Set clear deadlines for completing negotiations, due diligence, and signing the final agreement
• Review Process: Use our platform to generate a legally sound document that covers all essential elements under NZ law

• Party Identification: Full legal names, addresses, and signing authority of all involved entities
• Scope Statement: Clear outline of the proposed transaction or relationship being negotiated
• Binding Terms: Explicit identification of which provisions are immediately enforceable
• Non-Binding Terms: Clear marking of provisions subject to further negotiation
• Confidentiality Clause: Protection of sensitive information shared during negotiations
• Duration: Specific timeframe for negotiating the final agreement
• Governing Law: Explicit statement that New Zealand law applies to the agreement
• Signature Block: Proper execution sections for all parties, including witness requirements

A Preliminary Agreement differs significantly from an Asset Purchase Agreement, though they're often confused in business transactions. While both deal with commercial arrangements, their timing and enforceability set them apart.

• Legal Binding Effect: Preliminary Agreements typically have limited binding elements (mainly confidentiality and exclusivity), while Asset Purchase Agreements are fully binding contracts
• Detail Level: Preliminary Agreements outline basic terms and intentions, whereas Asset Purchase Agreements contain comprehensive terms, warranties, and specific obligations
• Timing: Preliminary Agreements come first in negotiations to establish framework terms, while Asset Purchase Agreements represent the final, executed deal
• Risk Management: Asset Purchase Agreements include detailed risk allocation and representations, while Preliminary Agreements focus on protecting negotiation processes