Heads of agreement

Heads of Agreement

leading to,

Full legal Agreement

This is where both sides sit down and thrash out the basics, trying to find as much common ground as possible. The aim is to identify the figures, terms and conditions that both sides are broadly happy with, a document called Heads of Agreement, then rewritten as a Full legal Agreement in dense legalese, by a legal professional.


These Heads of Agreement contain a record of preliminary negotiations between the parties to proposed licensing agreement. Their content is not legally binding until a formal contract has been executed.

Terms and Conditions

The object of this document is to establish “a workable agreement” by both sides in broad terms, but later in copious legal detail.

Prospective parties must agree to the following terms and conditions prior to disclosure of any innovative products:-

The parties

Name, address and status of the proposed ‘Licenser/Licensee’.


(i) Confidentiality agreement.

(ii) Non-disclosure agreement.

•   Prospective business(es)/individual(s) are requiring to assess the innovative product(s) must be UK resident.

•   Guarantee minimum monthly royalty/revenue, non refundable.

•   Start/end date of minimum monthly royalty and royalty/revenue fees.

•   Royalty/revenue percentage of average gross profit/unit sold or average net sales price.

•   No quantity limit.

•   To include ‘arm’s length transactions’.

•   Access to all accounts, both here in the UK and overseas.

•   Royalties/revenue to include overseas sales.

•   Patent attorney fees, paid by the prospective client(s), or agree an up front fee.

•   Royalty/revenue fees payable, even if his or her work substantially improves the product(s).

•   Royalty/revenue fees paid, if the company is sold or formed a joint venture with another company here in the UK or overseas.

•   Royalty/revenue fees payable, to include currency fluctuations.

•   Must be able to prove that they have the necessary finance, this can include:-

(i) Signed declaration.

(ii) Personal finance.

(iii) Grants.

(iv) Business loans, or business loan(s) agreed in principle.

(v) A bank statement.

or a combination of the above.

•   A time limit to assess the innovative product(s), enabling them to reject/decline the proposal if it isn’t right for them, or believe there is no market for the product(s).

•   A time scale to allow client(s) to consider the proposal from date of disclosure, and confirm in writing, if they are declining or accepting the proposal.

•   Disclosure must be in the presence of a patent attorney of my choice.

•   Heads of Agreement and Full legal Agreement must be completed in advance, prior to full disclosure of the innovative product(s), completed by a patent attorney.

•   Not to conflict with current product(s), that the company or individual(s) maybe developing.

•   Pay minimum royalty/revenue fees, e.g. 12 weeks, after accepting the proposal.

•   Royalty/revenue fees payable, even if infringement of a third-party occurs on other products.


These terms and conditions are subject to change without prior notice.

Important: Heads of Agreement are generally ‘subject to formal contract’.

©2013 – 2016