How the short-form agreement circumvents un agreed terms will be particularly important if the parties consider that the short-form agreement remains binding for a fixed period, even if they are unable to reach agreement on the full form agreement during that period. The decision to use a short-form agreement depends on the specific details of a resource project and what each party wants to achieve. Before making a decision, carefully weigh the pros and cons. This will help ensure that a short-form agreement does not become the basis for a long-standing controversy. These clauses may include clauses relating to confidentiality and privacy, intellectual property, exclusivity, costs and applicable legislation. However, where the parties are primarily concerned with the protection of confidential information and exclusivity under pre-contract obligations, the parties should consider whether a confidentiality and exclusivity agreement would be sufficient. If the parties do not provide for a short-form agreement to be legally binding, the agreement should contain an explicit statement on the matter. However, the parties must be aware that where a summary agreement is not legally binding, one party cannot appeal if the other party violates the agreement or fails to fulfill it. The parties must also be aware that even if an abbreviated agreement contains an explicit statement that the agreement is not legally binding, a court may take into account the conduct of one party (and the other party`s appeal to that conduct) in determining the intent of the parties, particularly in the absence of a properly formulated disclaimer. Agreements in brief that should not be legally binding First, it is necessary to check whether the benefits of negotiating a short-form agreement outweigh the benefits of a direct approach to the full forming agreement. Where an abbreviated form agreement is to be used, the parties should consider how the design and negotiation process is managed, so that it does not result in unnecessary delays or costs for the overall transaction and/or creates unnecessary tension between the parties.
If the short-form agreement includes a price or a tax, the parties should consider the circumstances under which that price or levy can be adjusted rather than a bare price. Contracting parties will often include, in a summary agreement, a commitment to negotiate in good faith the terms that have not been agreed but are important to the transaction. The parties must be aware that this obligation cannot be considered by a court to be legally binding. Even if a summary agreement is not legally binding, it can be used by one party in subsequent negotiations to impose a «moral obligation» on the other party not to deviate from the positions that the other party has taken in the short-form agreement. Regardless of whether or not a short-circuit agreement is appropriate, the parties should consider the potential tax implications of concluding a short-circuit agreement. Short agreements are often used in the resource sector and are known by a large number of names, including a Memorandum of Understanding, agreements, declarations of intent and concept sheets. Other considerations relate to the extent to which compensations and guarantees are dealt with in the abbreviated form agreement and whether disclosure of the brief form agreement to the ASX (or any other relevant exchange) is necessary. However, summary agreements are not without its pitfalls, especially when they are hastily developed.