Heads of Terms for Option Deals
A document which sets out the principle terms of a transaction agreed between the parties following negotiations relating to an option to sell or purchase a property.
Heads of Terms evidence serious intent and have moral force but do not legally oblige the parties to conclude the deal on those terms or even at all. The confidentiality and costs terms may however be binding on the parties.
They are used for several reasons:
as written confirmation of the main terms agreed in principle
outline the timetable and obligations of the parties going forward
as a framework for certain preliminary legally binding obligations, such as exclusivity of dealings and responsibility for costs
Heads of Terms are commonly entered into at the beginning of a transaction, once premilimary negotiations have aken place and before the formal legal process is commenced and definitive agreement(s) drafted by the legal advisors.
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