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Heads of Terms (Sales Agency)

Memorandum of Understanding (Sale of Goods Agency Agreement)


This Memorandum of Understanding (Sale of Goods Agency Agreement) (“MOU”) is designed to be signed as a preliminary non-binding heads of terms document. This MOU would then be followed by a binding detailed, definitive Agency Agreement under which the principal appoints an agent to sell the principal’s goods.

The data protection provisions in this document have been updated with reference to the UK GDPR.

It does not make any reference to whether or not the proposed agency appointment will be subject to the Commercial Agents (Council Directive) Regulations 1993. You should consider this when negotiating with the proposed agent and when drafting the MOU and the subsequent definitive Agency Agreement, and should take legal advice as necessary on the point. 

Where either or both parties to the MOU are based outside the UK or any aspect of the sales agency arrangement will relate to any territory outside the UK, we recommend that you take professional legal advice about the proposed arrangements before entering into the MOU.

Using an MOU such as this should help prevent misunderstandings. It should also aid the process of focusing on and agreeing all of the important legal and commercial points that need to be dealt with by the definitive, binding, Agency Agreement which is to follow the MOU.

This template contains numerous optional clauses (and alternative provisions within those clauses) from which you can select as appropriate. These include the option to appoint the agent on an exclusive basis for a particular territory. 

This detailed menu of heads of terms can serve as a convenient checklist to assist you to identify, negotiate and record in the MOU all of the points that should be covered by the parties in a full agreement. Once both parties have agreed and signed the MOU, you can pass it to your legal advisers as your instructions to them. Their task of drafting a definitive binding Agency Agreement should be quicker and easier if they have such a detailed MOU to work from, and hopefully that will be reflected in lower legal fees.

Before using this document, we recommend that you read the Guidance Notes on Heads of Terms, Memoranda of Understanding, Letters of Intent and Term Sheets in this subfolder. Those notes deal with a number of important general issues relating to all Memoranda of Understanding, Heads of Terms, Letters of Intent, Term Sheets and similar pre-contract documents.

We have also included this MOU template in the Distribution & Agency subfolder, alongside fully drafted template agreements for use when appointing sales agents.

This document is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

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