12. PURPOSE OF THE HEADS OF AGREEMENT

This final passage usually outlines the subjects of further negotiations between the parties. It sets limits to the rights of claim or action by one party against the other. It also serves as a guide to each party's attorney in the preparation of the Shareholder AgreementShareholder Agreement: a legally-binding document which describes the mutual obligations of the parties to a Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capitalCapital: cash, property, equipment, services, and contracts or leases., and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.)..

In reality, this section makes it formal that the parties agree that

• a definitive Shareholder Agreement will be drafted.
• negotiations will continue as specified.
• confidentialityConfidentialityConfidentiality: a promise not to reveal the contents of an agreement to anyone.: a promise not to reveal the contents of an agreement to anyone. and exclusivityExclusivity: a promise not to negotiate another deal that would compete with the one now being concluded. will be maintained.
• the parties will do all the things necessary to prepare the business for its date of commencement.