Heads of Terms

A heads of terms agreement is a written document drafted at the outset of a proposed commercial transaction with the aim of setting down the principal terms agreed between the parties. It operates as a very useful means of focusing the mind of each party and provides the framework for the main contract.

Generally a heads of terms agreement is not intended to be legally binding since it is only the initial expression of intention between the parties and will be subject to the detailed terms of the main contract. However it will often contain confidentiality provisions and an exclusivity clause whereby the parties agree a time period during which they will not negotiate with any third party.  It is usual for both these points to be legally binding.

Heads of terms will of course be different for every transaction. However they will generally focus on the following issues:

• the nature of the transaction
• a description of what is to be sold
• the sale price along with the method of payment
• any warranties and indemnities to be given
• conditions to be satisfied prior to completion
• due diligence and who will conduct the investigation
• timetable to completion
• accounting details

It is important to ensure that the heads of terms agreement is as clear and unambiguous as possible so that time is not wasted by disagreements later on in the transaction. Borneos works with clients to establish clear objectives from the outset and then prepares specific heads of terms to help both parties understand and agree how the transaction will proceed. 

 

If you would like to discuss how we might help you, please:

 

• call any of our office numbers listed at the bottom of this page;
• contact one of our specialists direct by clicking on their name below; or
• complete our enquiry form

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Members of our team specialising in this area:

Ken Borneo, Andrew Kerr, Mark Thompson

Jordan Glackin, Ian Jenkinson