In-depth Guide to MOA, JV, HOA, Term Sheet, Fact Sheet, and Tear Sheet: Full Explanation with Examples and Drafts

In a business ecosystem, sound agreements form the foundation of successful collaborations, joint ventures, and investments. This guide offers a thorough and detailed understanding of six core types of agreements:

• Memorandum of Agreement (MOA)
• Joint Venture Agreement (JV)
• Heads of Agreement (HOA)
• Term Sheet
• Fact Sheet
• Tear Sheet

For each, you will find detailed explanations, real-world examples, the serious consequences of oversight or non-compliance, and even sample drafts to help you get started effectively. Bonus FAQs at the end address common queries to round out your knowledge.

1. Memorandum of Agreement (MOA)

Detailed Explanation

A Memorandum of Agreement is a legal document that articulates the terms, commitments, and framework for collaboration between multiple parties working toward a shared objective. Often used for joint projects, service partnerships, or other cooperative initiatives, MOAs specify precise obligations, financial arrangements, timelines, and confidentiality requirements.

The power of the MOA lies in its ability to clarify expectations before significant resources are deployed, preventing misunderstandings and laying a foundation for accountability.

Primary Components of an MOA

• Purpose and Scope: A crystal-clear statement of what the partnership seeks to accomplish, including limits and boundaries to the collaboration.
• Background: Contextual information about the parties and their reasons for entering the MOA, including any previous agreements or related business ties.
• Roles and Responsibilities: This section outlines the duties and contributions of each party, including operational, managerial, and financial obligations.
• Funding and Considerations: If the collaboration entails funding or resource exchange, details on amounts, schedules, and sources are included here.
• Duration and Termination: The effective date, duration, renewal conditions, and terms under which the MOA may be terminated.
• Dispute Resolution: Mechanisms such as mediation or arbitration to resolve conflicts without litigation, fostering smoother partnerships.
• Confidentiality and Non-Compete: Protecting sensitive data and business interests shared during collaboration.
• Modification Clauses: Procedures for changes or amendments to the MOA agreed upon by all parties.
• Signatures: Authorized representatives of all parties must sign to validate the MOA.

Example in Practice

Sawaria Infra India Pvt Ltd entered an MOA with partners to expand infrastructure delivery and pipeline manufacturing. The document detailed each founder’s capital input, the operational responsibilities for construction vs manufacturing, and liability limitations with a clear project timeline.

2. Joint Venture Agreement (JV)

Comprehensive Overview

A Joint Venture Agreement is a pivotal legal document between two or more parties pooling resources to operate a specific business venture. The JV Agreement spells out the capital contributions, organizational governance, profit and loss distribution, duration, and dissolution terms.

Typically, JVs either form a new legal entity or operate under a contractual arrangement with defined guidelines. The clarity of roles and financial commitments is paramount to JV success.

Key JV Agreement Elements

• Purpose and Scope: Defines the business objectives and limits.
• Structure: Entity formation or contract basis.
• Capital Contributions: Detailed allocations of monetary assets, property, or intellectual property.
• Profit and Loss Shares: Specifies participation in financial outcomes.
• Governance: Defines board composition, voting rights, and decision-making protocols.
• Exit and Termination: Terms for withdrawal, dissolution, or buyouts.
• Confidentiality and IP: Safeguarding trade secrets and innovations.

Real-World JV Examples

In 2007, MillerCoors was born through a JV between Molson Coors and SABMiller, combining their US operations to leverage market dominance, shared brand portfolios, and cost efficiencies.

BMW Brilliance exemplifies a successful JV where BMW gained a 50% stake with local partner Brilliance Auto in China, allowing BMW to access China’s massive automobile market under favorable conditions.

3. Heads of Agreement (HOA)

In-Depth Explanation

The HOA provides a strategic yet preliminary framework of a prospective deal, usually non-binding except for key provisions like confidentiality or exclusivity. It acts as a roadmap, outlining main deal points to align parties before committing financially or operationally.

Components You’ll Usually See

• Intent declaration for the forthcoming deal.
• Principal terms like investment value, scope, territorial rights.
• Timelines for due diligence completion, contract drafting.
• Identification of binding and non-binding sections.
• Confidentiality and exclusivity clauses (usually binding).

Example Scenario

A UK-based fashion brand preparing expansion into India uses an HOA to define franchise exclusivity territories, investment sums, and intellectual property usage before drafting final franchise agreements.

4. Term Sheet

Detailed Definition

Widely used in venture capital, private equity, and M&A, Term Sheets summarize principal deal terms non-legally binding except for some clauses. They articulate valuations, ownership stakes, investor rights, liquidation preferences, and other crucial deal mechanics.

Typical Term Sheet Structure

• Investor and company names and roles.
• Amount invested and pre/post-money valuations.
• Ownership percentages and classes of stock.
• Governance rights, including board seats.
• Protection mechanisms such as anti-dilution clauses.
• Exit preferences and dividend policies.
• Binding confidentiality clauses.

Sample Example

An angel investor offers ₹2 crore for a 15% stake in an EdTech startup at an ₹11.3 crore pre-money valuation, with 4-year vesting for founders and 1x liquidation preference detailed in their Term Sheet.

5. Fact Sheet

Explanation and Use

A Fact Sheet condenses large contract information into digestible bullet points for management, auditors, or stakeholders needing quick insights into contract essentials without delving into full legal documentation.

Typical Fact Sheet Sections

• Parties and contract title.
• Effective and end dates.
• Scope of services/products.
• Payment structure.
• Renewal and termination clauses.
• Key contact information.

Example

A state university’s outsourced bus service contract was summarized in a Fact Sheet listing contract length, fees, service scope, emergency contacts, and renewal terms for quick reference by administrators.

6. Tear Sheet

What Is It and Purpose

In financial and investment contexts, a Tear Sheet is a concise one-page summary showing key company metrics — market cap, revenue, profitability, analyst recommendations — enabling quick investor decision-making.

Tear Sheet Components

• Company name and stock ticker.
• Market capitalization and share price.
• Annual revenue and EBITDA margins.
• Recent news or strategic events.
• Analyst buy/sell holds advice.
• Investor relations contact.

Example Tear Sheet

An analyst’s tear sheet on “XYZ Ltd” showed a ₹2200 crore market cap, 18% EBITDA margin, recent product launch news, and a strong buy recommendation, supporting swift investment choices.

Summary Table of Business Agreement Documents with Examples and Consequences

Sample Drafts for Each Document

Memorandum of Agreement (MOA) Sample

MEMORANDUM OF AGREEMENT

This Memorandum of Agreement ("MOA") is entered into on [Date], by and between:

[Party A Name], with principal offices at [Address], and  
[Party B Name], with principal offices at [Address].

PURPOSE  
To formalize collaboration on [describe project] and specify roles, responsibilities, and financial arrangements.

RESPONSIBILITIES  
Party A agrees to:  
- Provide [list contributions].  
Party B agrees to:  
- Provide [list contributions].

DURATION  
Effective from [Start Date] to [End Date], with termination provisions as stated.

DISPUTE RESOLUTION  
Parties agree to resolve disputes via [mediation/arbitration].

CONFIDENTIALITY  
All shared information remains confidential.

Signed:  
[Name, Title, Party A]          [Name, Title, Party B]
    

Joint Venture Agreement (JV) Sample

JOINT VENTURE AGREEMENT

This Agreement entered on [Date], by and between:

[Company A Name], located at [Address], and  
[Company B Name], located at [Address].

OBJECTIVE  
To jointly operate [business/project].

CAPITAL CONTRIBUTIONS  
Company A: $[Amount]  
Company B: $[Amount]

MANAGEMENT  
Board of [X] members: Company A ([#]), Company B ([#]).

PROFIT & LOSS SHARING  
According to capital contribution proportions.

TERMINATION  
Terms for dissolution and buyouts included.

Signed By:  
[Name, Title, Company A]       [Name, Title, Company B]
    

Heads of Agreement (HOA) Sample

HEADS OF AGREEMENT

Made on [Date] by and between:  
[Party A] and [Party B]

KEY TERMS  
- Purpose: [Summary]  
- Investment Amount: $[Amount]  
- Exclusivity Period: [Duration]  
- Confidentiality: Binding clause

NON-BINDING CLAUSE  
All terms except confidentiality and exclusivity are non-binding pending final agreements.

Signed:  
[Party A]                   [Party B]
    

Term Sheet Sample

TERM SHEET

Date: [Date]

PARTIES: [Startup Name] and [Investor Name]

INVESTMENT DETAILS  
- Capital invested: $[Amount]  
- Valuation: $[Pre-money amount]  
- Equity granted: [%]

GOVERNANCE  
- Board seats: [Number for investor]

SPECIAL TERMS  
- Liquidation preference: 1x non-participating  
- Vesting: 4 years, 1-year cliff  
- Confidentiality provisions

Signed:  
[Startup rep]                 [Investor rep]
    

Fact Sheet Sample

FACT SHEET

Contract Title: [Contract Name]  
Parties: [Party A], [Party B]  
Effective Date: [Date]  
Expiry Date: [Date]  
Scope: [Brief description]  
Payment Terms: [Details]  
Renewal & Termination: [Conditions]  
Key Contacts: [Names, Titles, Contact Info]
    

Tear Sheet Sample

TEAR SHEET

Company: [Company Name]  
Ticker: [Symbol]  
Market Cap: $[Value]  
Revenue (FY): $[Value]  
EBITDA Margin: [%]  
Recent News: [Summary]  
Analyst Rating: [Buy/Hold/Sell]  
Contact: [Investor Relations Info]
    

Frequently Asked Questions (FAQs)

Q1: Is an MOA legally binding?

A: Yes, typically an MOA is legally binding if it contains the essential contract elements—offer, acceptance, consideration, and intention. Some MOAs may specify otherwise and be treated as statements of intent only.

Q2: How does a Joint Venture Agreement differ from a Partnership Agreement?

A: JVs are usually project-specific collaborations that may set up a new legal entity focused solely on that venture. Partnerships are broader, may be ongoing, and often entail personal liability for debts.

Q3: Are Heads of Agreement enforceable?

A: Mostly, HOAs are not legally binding except for certain clauses identified as binding—typically confidentiality, exclusivity, and sometimes governing law provisions.

Q4: What is the purpose of a Term Sheet?

A: Term Sheets outline the key business and legal terms of a deal to guide drafting of formal contracts, ensuring alignment before incurring legal costs.

Q5: How do Fact Sheets and Tear Sheets differ?

A: Fact Sheets summarize contractual obligations and terms for internal management. Tear Sheets condense financial and business performance data for investors and analysts.

Q6: What are the risks if parties do not follow these agreements?

A: Non-compliance can cause legal disputes, fines, loss of trust, stalled projects, or failed investments. Clear, enforceable agreements help avoid these risks.