Head Of Terms Agreement for the United Kingdom

Head Of Terms Agreement Template for England and Wales

A Heads of Terms Agreement under English and Welsh law is a preliminary document that outlines the key terms and conditions of a proposed transaction or business arrangement. It serves as a framework for subsequent detailed negotiations and typically includes both binding and non-binding provisions. The document captures the principal commercial terms, timelines, and conditions precedent while providing a structured approach to further negotiations and due diligence processes.

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What is a Head Of Terms Agreement?

The Head of Terms Agreement is commonly used in England and Wales as a preliminary step in significant commercial transactions, serving to document the parties' initial understanding and agreement on key commercial terms. It typically precedes more detailed contractual documentation and is particularly valuable in complex negotiations where parties need to establish clear parameters before committing substantial resources to due diligence and detailed documentation. The document helps prevent misunderstandings by recording the essential elements of the proposed transaction while typically maintaining flexibility for further negotiation of detailed terms.

What sections should be included in a Head Of Terms Agreement?

1. Parties: Identification and details of all parties involved in the agreement

2. Background: Context and purpose of the proposed transaction or arrangement

3. Definitions: Key terms used throughout the document

4. Transaction Overview: High-level summary of the proposed deal structure

5. Key Commercial Terms: Principal commercial terms including pricing, payment terms, and timelines

6. Binding/Non-binding Nature: Clear statement of which terms are intended to be legally binding

What sections are optional to include in a Head Of Terms Agreement?

1. Exclusivity: Terms preventing parties from negotiating with others during a specified period

2. Due Diligence: Framework for information sharing and verification process

3. Break Fee: Compensation provisions if either party withdraws from the transaction

4. Conditions Precedent: Prerequisites that must be met before proceeding with the transaction

What schedules should be included in a Head Of Terms Agreement?

1. Asset Schedule: Detailed list of assets involved in the transaction

2. Timetable: Detailed timeline for completion of the transaction and key milestones

3. Key Personnel: List of key individuals involved in the transaction and their roles

4. Due Diligence Requirements: Specific information and documentation requirements for the due diligence process

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Industries

Law of Property (Miscellaneous Provisions) Act 1989: Key legislation governing formalities of contracts and property transactions in England and Wales

Contracts (Rights of Third Parties) Act 1999: Legislation governing how third parties may enforce terms of a contract

Companies Act 2006: Primary legislation governing company formation and operation in the UK, relevant when parties are corporate entities

Partnership Act 1890: Legislation governing partnership arrangements, applicable if parties are in partnership structure

UK GDPR and Data Protection Act 2018: Legislation governing the processing and protection of personal data in the UK

Copyright, Designs and Patents Act 1988: Primary legislation governing intellectual property rights in the UK

Competition Act 1998: Legislation governing anti-competitive behavior and agreements in the UK

Enterprise Act 2002: Legislation concerning market regulation and corporate insolvency in the UK

Money Laundering Regulations 2017: Regulations governing due diligence requirements and anti-money laundering measures

Proceeds of Crime Act 2002: Legislation dealing with criminal proceeds and money laundering obligations

Common Law Contract Principles: Fundamental principles including offer, acceptance, consideration, and intention to create legal relations

Confidentiality Obligations: Legal requirements and principles governing the protection of confidential information shared during negotiations

Exclusivity Provisions: Legal framework for creating binding exclusivity periods in heads of terms

Break Fee Arrangements: Legal principles governing the implementation and enforcement of break fees in preliminary agreements

Dispute Resolution Framework: Legal mechanisms for resolving disputes under English law, including litigation and alternative dispute resolution

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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