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A Preliminary Agreement sets out the key terms and basic understanding between parties before they sign a final contract. It's commonly used in Singapore when businesses want to move forward with negotiations while working out the finer details of their deal. Think of it as a roadmap that outlines the major points everyone has agreed to so far.

These agreements can be legally binding or non-binding, depending on how they're written and what the parties intend. Under Singapore contract law, even a non-binding version helps prevent misunderstandings and keeps negotiations on track. Common types include Letters of Intent, Memoranda of Understanding, and Term Sheets - especially useful in property transactions, business mergers, and joint ventures.

Use a Preliminary Agreement when you need to lock down the basic terms of a complex deal while still hammering out the details. This document proves especially valuable in Singapore's fast-moving property market, where buyers and sellers need to quickly secure their core commitments before finalizing the transaction.

It's particularly useful during mergers and acquisitions, joint ventures, or major construction projects when due diligence takes time. The agreement helps maintain momentum by documenting key points like price, timeline, and basic terms - while protecting both parties if negotiations stall. This approach gives everyone clarity and confidence to proceed with costly preparation work, such as detailed surveys or regulatory applications.

• Non-binding Letters of Intent: Outline basic deal terms without creating legal obligations, perfect for initial negotiations in property deals or investments
• Binding Term Sheets: Create firm commitments on key points while leaving room for detailed terms, commonly used in M&A transactions
• Memoranda of Understanding: Strike a middle ground with some binding elements (like confidentiality) while keeping other terms open for discussion
• Heads of Agreement: Popular in commercial property and construction deals, combining both binding and non-binding elements with clear labeling
• Framework Agreements: Establish general principles and processes for complex, long-term relationships while allowing for future detailed agreements

• Business Owners and CEOs: Initiate and approve Preliminary Agreements during major transactions, setting the strategic direction for deals
• Corporate Lawyers: Draft and review terms to ensure legal protection while maintaining flexibility for final negotiations
• Property Developers: Use these agreements to secure basic terms with contractors, buyers, or joint venture partners
• Investment Bankers: Coordinate deal terms and structure during M&A transactions or funding rounds
• Company Directors: Review and authorize these agreements as part of their corporate governance duties under Singapore law

• Core Deal Terms: Gather essential details like price, timeline, and key obligations that both parties have already discussed
• Party Information: Collect full legal names, registration numbers, and authorized representatives of all involved entities
• Binding Status: Decide which terms need to be legally binding and which remain flexible for future negotiation
• Due Diligence Plans: Outline the scope and timeline of any required investigations or assessments
• Deal Structure: Define the basic transaction framework, including any conditions precedent or break fees
• Documentation: Use our platform to generate a legally sound agreement that includes all required elements under Singapore law

• Parties and Purpose: Clear identification of all parties and a precise statement of the agreement's objectives
• Binding Status Declaration: Explicit statement on which terms are legally binding and non-binding
• Key Commercial Terms: Essential deal points like price, timeline, and fundamental obligations
• Confidentiality Clause: Terms protecting sensitive information shared during negotiations
• Exclusivity Period: Duration during which parties cannot negotiate with others
• Governing Law: Clear statement that Singapore law applies and local courts have jurisdiction
• Termination Rights: Conditions under which either party can end negotiations
• Signature Block: Proper execution sections for authorized representatives

A Preliminary Agreement differs significantly from a Business Acquisition Agreement in several key ways. While both documents play important roles in corporate transactions, they serve distinct purposes and come into play at different stages of a deal.

• Timing and Commitment: Preliminary Agreements establish initial understanding during early negotiations, while a Business Acquisition Agreement represents the final, binding transaction terms
• Level of Detail: Preliminary Agreements outline basic terms and structure, whereas Business Acquisition Agreements contain comprehensive details, warranties, and specific obligations
• Legal Effect: Preliminary Agreements can be partially binding or non-binding, but Business Acquisition Agreements are fully binding and enforceable
• Due Diligence: Preliminary Agreements often set the framework for due diligence, while Business Acquisition Agreements incorporate findings from completed due diligence
• Risk Allocation: Business Acquisition Agreements include detailed risk allocation mechanisms, while Preliminary Agreements typically address only basic risk principles