Preliminary Agreement for Malaysia

Preliminary Agreement Template for Malaysia

A Preliminary Agreement under Malaysian law serves as a formal document establishing the initial framework for a proposed transaction or business relationship. It outlines the basic terms and conditions that parties have agreed to in principle, while maintaining certain binding obligations such as confidentiality and exclusivity. This document, governed by Malaysian contract law principles including the Contracts Act 1950, creates a structured approach to negotiations and future dealings while protecting both parties' interests during the preliminary phase of their business relationship. It typically includes provisions for good faith negotiations, confidentiality, exclusivity periods, and the process for moving forward to a definitive agreement.

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What is a Preliminary Agreement?

The Preliminary Agreement is a crucial document used in Malaysian business transactions when parties need to formalize their initial understanding before proceeding to a final, more detailed agreement. It serves as a bridge between initial discussions and the final contract, particularly in complex transactions such as mergers and acquisitions, joint ventures, or significant commercial arrangements. This document type is governed by Malaysian law, specifically the Contracts Act 1950 and related statutes, and typically includes both binding elements (such as confidentiality and exclusivity provisions) and non-binding elements (such as the proposed main terms of the final transaction). The Preliminary Agreement helps manage expectations, establish timelines, and protect parties' interests during negotiations, while providing a clear framework for progressing toward a definitive agreement.

What sections should be included in a Preliminary Agreement?

1. Parties: Identification and details of all parties entering into the preliminary agreement

2. Background: Context of the proposed transaction and purpose of entering into this preliminary agreement

3. Definitions: Key terms used throughout the agreement and their specific meanings

4. Scope of Preliminary Agreement: Clear outline of what is covered under this preliminary agreement and its non-binding/binding aspects

5. Duration: Timeline for the preliminary agreement, including commencement and expiry dates

6. Good Faith Negotiations: Commitment to negotiate the final agreement in good faith

7. Confidentiality: Obligations regarding confidential information exchanged during preliminary discussions

8. Exclusivity: Provisions preventing parties from negotiating with other parties during this period

9. Costs and Expenses: Allocation of costs incurred during the preliminary phase

10. Termination: Circumstances under which the preliminary agreement can be terminated

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

What sections are optional to include in a Preliminary Agreement?

1. Due Diligence: Include when the preliminary agreement involves a due diligence process, outlining scope and process

2. Break Fee: Include when parties want to specify compensation if one party withdraws from negotiations

3. Regulatory Approvals: Include when the proposed transaction requires specific regulatory clearances

4. Intellectual Property Protection: Include when preliminary discussions involve sharing of IP or technical information

5. Public Announcements: Include for high-profile transactions requiring control over public communications

6. Security Deposit: Include when a deposit or security is required during the preliminary phase

7. Timeline and Milestones: Include when specific deadlines for various stages need to be established

What schedules should be included in a Preliminary Agreement?

1. Schedule 1 - Key Terms of Proposed Transaction: Outline of main commercial terms agreed in principle

2. Schedule 2 - Timeline and Key Dates: Detailed timeline for negotiations, due diligence, and target completion

3. Schedule 3 - Required Documentation: List of documents required for due diligence or final agreement

4. Schedule 4 - Authorized Representatives: List of key contact persons and their authority levels

5. Appendix A - Form of Non-Disclosure Agreement: Standard NDA format if separate from main agreement

6. Appendix B - Term Sheet: Basic terms of the proposed final agreement in summary form

Authors

Alex Denne

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

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant Industries

Real Estate Development

Manufacturing

Technology and Software

Mergers and Acquisitions

Construction

Energy and Resources

Telecommunications

Financial Services

Healthcare

Retail and Consumer Goods

Infrastructure Development

International Trade

Relevant Teams

Legal

Corporate Development

Finance

Business Development

Commercial

Compliance

Risk Management

Corporate Secretariat

Executive Leadership

Project Management

Investment

Operations

Relevant Roles

Chief Executive Officer

Managing Director

Legal Counsel

Chief Financial Officer

Business Development Manager

Commercial Director

Contract Manager

Corporate Secretary

Head of Mergers and Acquisitions

Risk Manager

Compliance Officer

Project Director

Chief Operating Officer

Investment Manager

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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