Heads of terms Template for Germany

A Heads of terms lays out the key points of a future contract before the parties create the final, detailed agreement. In German business practice, it's often called a "Letter of Intent" or "Absichtserklärung" and captures the main commercial terms both sides have agreed to in principle.

While not usually legally binding under German law (except for confidentiality clauses), this document helps prevent misunderstandings and guides lawyers drafting the final contract. It's particularly common in real estate transactions, corporate mergers, and major business deals where parties need to agree on basic terms before investing time and money in detailed negotiations.

Use a Heads of terms when negotiating complex business deals in Germany where you need to lock down the main points before spending resources on detailed contracts. It's especially valuable for real estate purchases, company mergers, or joint ventures where multiple stakeholders must align on key terms early.

This document becomes crucial when dealing with international partners who expect formal preliminary agreements, or when your deal involves sensitive information that needs confidentiality protection from the start. German businesses often use it to secure board approvals or bank financing, as it demonstrates serious intent while maintaining flexibility on final terms.

• Basic Term Sheet: The simplest form, outlining only essential deal points and pricing terms, commonly used in straightforward business transactions
• Detailed Letter of Intent: A comprehensive version with binding confidentiality and exclusivity provisions, typical for complex M&A deals
• Real Estate Memorandum: Specifically structured for property transactions, focusing on purchase price, conditions, and timing
• Investment Term Sheet: Used for venture capital or private equity investments, detailing valuation, shareholding, and governance rights
• Joint Venture Framework: Outlines partnership structure, profit sharing, and operational responsibilities between collaborating companies

• Business Executives: CEOs, managing directors, and board members who negotiate and approve the main commercial terms in a Heads of terms
• Corporate Lawyers: In-house counsel or external law firms who review and refine the terms to ensure legal compliance and protect client interests
• Investment Bankers: Often involved in drafting financial terms for M&A deals or corporate restructuring
• Real Estate Developers: Use them to outline property acquisition terms and development plans
• Commercial Directors: Responsible for negotiating business partnerships and joint venture arrangements

• Business Details: Gather complete legal names, addresses, and registration numbers of all participating parties
• Deal Structure: Define the core transaction elements, price points, and key commercial terms clearly
• Timeline: Map out critical dates, including due diligence periods and expected completion date
• Binding Clauses: Identify which terms need legal force (typically confidentiality and exclusivity)
• Internal Approvals: Confirm authority levels needed for signing within each organization
• Documentation: Our platform generates legally compliant Heads of terms, ensuring all essential elements are properly included

• Party Details: Full legal names, addresses, and registration numbers of all involved entities
• Transaction Scope: Clear description of the proposed deal or arrangement, including key commercial terms
• Confidentiality: Binding provisions protecting sensitive information exchanged during negotiations
• Non-Binding Statement: Clear declaration that most terms are not legally binding yet
• Exclusivity Period: If applicable, duration for exclusive negotiations
• Governing Law: Usually German law, with specific jurisdiction stated
• Signature Block: Names and titles of authorized representatives
• Duration: Validity period and conditions for termination

A Heads of terms differs significantly from a Asset Purchase Agreement in several key aspects, though both documents play important roles in business transactions. The main distinctions focus on timing, legal force, and level of detail.

• Legal Binding Nature: Heads of terms are mostly non-binding (except for confidentiality clauses), while Asset Purchase Agreements are fully binding legal contracts
• Detail Level: Heads of terms outline key commercial points briefly, whereas Asset Purchase Agreements contain extensive legal provisions, warranties, and precise terms
• Timing: Heads of terms come first as a framework document, while the Asset Purchase Agreement serves as the final, definitive contract
• Purpose: Heads of terms facilitate initial agreement on main points, while Asset Purchase Agreements execute the actual transfer of business assets