The Head of Terms Agreement is a crucial preliminary document used in Malaysian business transactions to establish the foundation for complex commercial arrangements. It is typically employed during the initial stages of significant business transactions such as mergers and acquisitions, joint ventures, property developments, or major commercial contracts. The document captures the essential terms agreed upon by the parties while detailed negotiations continue, providing a structured framework for proceeding to definitive agreements. Under Malaysian law, while most provisions are typically non-binding, certain elements such as confidentiality and exclusivity clauses can be specifically made binding. The document needs to comply with Malaysian legal requirements, including the Contracts Act 1950 and other relevant legislation, while being mindful of local business customs and practices.

1. Parties: Identification of all parties involved in the proposed transaction, including full legal names and registration details

2. Background: Context of the proposed transaction and purpose of the heads of terms

3. Definitions: Key terms used throughout the document that require precise definition

4. Principal Terms: Core commercial terms of the proposed transaction including key obligations, pricing, and timelines

5. Due Diligence: Framework for any due diligence process, including scope and timeline

6. Conditions Precedent: Key conditions that must be satisfied before proceeding to definitive agreements

7. Exclusivity: Terms regarding exclusive negotiations, if applicable

8. Confidentiality: Provisions regarding the confidentiality of negotiations and information exchange

9. Costs: Allocation of costs and expenses related to the transaction

10. Binding Effect: Clear statement of which provisions are intended to be legally binding

11. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction for disputes

12. Execution: Signature blocks and execution provisions