A Heads of Terms agreement serves as a written confirmation of some of the key terms that have been agreed in principle by both parties. It is therefore very useful in exhibiting how committed and serious both parties are towards the transaction.
Often, a Heads of Terms agreement will outline a time frame/timetable along with obligations of each party throughout the negotiations – this can be particularly beneficial if a transaction is complex or very high in value, as it simplifies an otherwise extremely complicated process.
Several other benefits of having a Head of Terms agreement include:
- That it gives the commercial solicitors a strong starting point when drafting contracts later on.
- That if third parties want to look over the agreement, they are able to do so easily.
- That having a solid Head of Terms agreement both parties are happy with can lead to shorter negotiations and less friction going forward, speeding up the overall conveyancing process.