When considering a partnership in business, incorporating an existing business with current partners, or even negotiating the terms of buying or selling a home, a Heads of Agreement document should be written and presented to be sure that all parties are aware of legal requirements, requested terms, methods of payment for funds in the transaction, and terms of payment of funds due to other parties. In short, the document is a starting point in negotiating for major financial interactions, allowing documentation of the terms to be agreed upon, and the final outcome that specifically states the agreement.

The Heads of Agreement document starts as an informal communication between parties in order to come to a formal agreement that is then submitted as a legal document that must be adhered to. It may take more than one Heads of Agreement document between solicitors or private parties as negotiations proceed and concessions are made or extra demands and corrections occur. Of course, personal meetings, telephone calls, and written correspondence is most often done in order to draft the documents, to allow each party in the endeavour to voice opinion or correct misleading wording or errors in the description of terms.

In business partnerships, the Heads of Agreement document should outline which partner is responsible for different expenditures required in the business as well as how they will be compensated with the profits made. Most often, this is based on the percentage of investment made by the partner. In addition, it should outline terms and requests in regards to the promotion of the business, such as using outside advertising sources or whether a partner is able to competently handle the responsibility. Incorporating a business should outline the same details, as well as an outlook for compensating other investors in the business, and at what point in the level of profits that investors will be paid.