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Heads of terms - Wikipedia

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.mbox-imageright{border:none;padding:2px 0.5em 2px 0;text-align:center}.mw-parser-output .ambox .mbox-empty-cell{border:none;padding:0;width:1px}.mw-parser-output .ambox .mbox-image-div{width:52px}@media(min-width:720px){.mw-parser-output .ambox{margin:0 10%}}@media print{body.ns-0 .mw-parser-output .ambox{display:none!important}}</style><table class="box-Globalize plainlinks metadata ambox ambox-content ambox-globalize" role="presentation"><tbody><tr><td class="mbox-image"><div class="mbox-image-div"><span typeof="mw:File"><span><img alt="Globe icon." src="//upload.wikimedia.org/wikipedia/commons/thumb/b/bd/Ambox_globe_content.svg/48px-Ambox_globe_content.svg.png" decoding="async" width="48" height="40" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/b/bd/Ambox_globe_content.svg/73px-Ambox_globe_content.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/b/bd/Ambox_globe_content.svg/97px-Ambox_globe_content.svg.png 2x" data-file-width="350" data-file-height="290" /></span></span></div></td><td class="mbox-text"><div class="mbox-text-span">The examples and perspective in this article <b>deal primarily with the United Kingdom and New Zealand and do not represent a <a href="/wiki/Wikipedia:WikiProject_Countering_systemic_bias" title="Wikipedia:WikiProject Countering systemic bias">worldwide view</a> of the subject</b>.<span class="hide-when-compact"> You may <a class="external text" href="https://en.wikipedia.org/w/index.php?title=Heads_of_terms&amp;action=edit">improve this article</a>, discuss the issue on the <a href="/wiki/Talk:Heads_of_terms" title="Talk:Heads of terms">talk page</a>, or <a href="/wiki/Wikipedia:Article_wizard" title="Wikipedia:Article wizard">create a new article</a>, as appropriate.</span> <span class="date-container"><i>(<span class="date">February 2017</span>)</i></span><span class="hide-when-compact"><i> (<small><a href="/wiki/Help:Maintenance_template_removal" title="Help:Maintenance template removal">Learn how and when to remove this message</a></small>)</i></span></div></td></tr></tbody></table> <p>A set of <b>heads of agreement</b>, <b>heads of terms,</b> or <b>letter of intent</b> is a non-binding document outlining the main issues relevant to a tentative sale, partnership, or other agreement.<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">&#91;</span>1<span class="cite-bracket">&#93;</span></a></sup> </p><p>A heads of agreement document will only be <a href="/wiki/Enforceable" class="mw-redirect" title="Enforceable">enforceable</a> when it is adopted into a <a href="/wiki/Parent_contract" class="mw-redirect" title="Parent contract">parent contract</a> and is subsequently agreed upon, unless otherwise stated. Until that point, a heads of agreement will not be <a href="/wiki/Legally_binding" class="mw-redirect" title="Legally binding">legally binding</a>. However, such documents can become legally binding if the agreement document contains terms or language which explicitly indicates an <a href="/wiki/Intention_to_be_legally_bound" class="mw-redirect" title="Intention to be legally bound">intention to be legally bound</a>. Equally, a letter which contains no expression of whether its terms were intended to be binding can be found to be binding due to language used. This is also dependent on the circumstances of the transaction and includes the conduct of the parties themselves.<sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">&#91;</span>2<span class="cite-bracket">&#93;</span></a></sup><sup id="cite_ref-3" class="reference"><a href="#cite_note-3"><span class="cite-bracket">&#91;</span>3<span class="cite-bracket">&#93;</span></a></sup> </p><p>A key function of Heads of Terms is to assist in the identification of critical issues as early as possible during negotiations which could stop a transaction going ahead. </p> <div class="mw-heading mw-heading2"><h2 id="Commercial_property_transaction">Commercial property transaction</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Heads_of_terms&amp;action=edit&amp;section=1" title="Edit section: Commercial property transaction"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In a <a href="/wiki/Commercial_property" title="Commercial property">commercial property</a> transaction in the UK, a heads of agreement is often known as the <b>heads of terms</b> (<b>HOTS</b>). The main purpose of the heads of terms is to identify and highlight the requirements of both the seller and the purchaser of the property. There are a number of advantages of using the heads of terms. For instance, by carrying this out, both parties will fully understand what they are subject to, and can reduce or abolish any misunderstandings from either party.<sup id="cite_ref-4" class="reference"><a href="#cite_note-4"><span class="cite-bracket">&#91;</span>4<span class="cite-bracket">&#93;</span></a></sup> The heads of terms normally contains the following information: </p> <ul><li>Details of the property seller</li> <li>Details of the property purchaser</li> <li>Address of the commercial property</li> <li>Details of the commercial property</li> <li>The purchase price both parties have agreed to</li> <li>The payment information</li> <li>Any special conditions</li> <li>Transaction completion date</li></ul> <p>An agreement made in writing, signed by all parties, including the terms expressly agreed by the parties and evidencing <a href="/wiki/Offer_and_acceptance" title="Offer and acceptance">offer, acceptance</a>, <a href="/wiki/Consideration" title="Consideration">consideration</a> and intention to create legal relations is likely to be treated as a binding contract because such contents reflect the requirements of the <a href="/wiki/Law_of_Property_(Miscellaneous_Provisions)_Act_1989" title="Law of Property (Miscellaneous Provisions) Act 1989">Law of Property (Miscellaneous Provisions) Act 1989</a>, which states (in section 2) that "<i>a contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each</i>".<sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">&#91;</span>5<span class="cite-bracket">&#93;</span></a></sup><sup id="cite_ref-ss_6-0" class="reference"><a href="#cite_note-ss-6"><span class="cite-bracket">&#91;</span>6<span class="cite-bracket">&#93;</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Heads_of_terms&amp;action=edit&amp;section=2" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><i><a href="/wiki/Fletcher_Challenge_Energy_Ltd_v_Electricity_Corp_of_New_Zealand_Ltd" title="Fletcher Challenge Energy Ltd v Electricity Corp of New Zealand Ltd">Fletcher Challenge Energy Ltd v Electricity Corp of New Zealand Ltd</a></i> [2002] 2 NZLR 433</li> <li><i><a href="/wiki/RTS_Flexible_Systems_Ltd_v_Molkerei_Alois_M%C3%BCller_GmbH_%26_Co_KG" title="RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH &amp; Co KG">RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH &amp; Co KG</a></i> [2008]</li> <li><a href="/wiki/Letter_of_intent" title="Letter of intent">Letter of intent</a></li> <li><a href="/wiki/Memorandum_of_understanding" title="Memorandum of understanding">Memorandum of understanding</a></li> <li><a href="/wiki/Term_sheet" title="Term sheet">Term sheet</a></li></ul> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=Heads_of_terms&amp;action=edit&amp;section=3" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap"><ol class="references"> <li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text">Website Investopedia (24 Jan 2008), <a rel="nofollow" class="external text" href="http://www.investopedia.com/terms/h/headsofagreement.asp">Heads of Agreement</a></span> </li> <li id="cite_note-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-2">^</a></b></span> <span class="reference-text">Dammone, L., <a rel="nofollow" class="external text" href="https://www.lexology.com/library/detail.aspx?g=5436baf1-6e41-4b30-a560-cb36f9f384a7">Letters of intent and heads of terms – binding or not binding?</a>, 31 October 2008</span> </li> <li id="cite_note-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-3">^</a></b></span> <span class="reference-text">Supreme Court (UK), <a rel="nofollow" class="external text" href="https://www.supremecourt.uk/cases/docs/uksc-2009-0048-judgment.pdf">RTS Flexible Systems v Molkerei Alois Muller GmbH</a>, 10 March 2010</span> </li> <li id="cite_note-4"><span class="mw-cite-backlink"><b><a href="#cite_ref-4">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free 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href="http://www.movehut.co.uk/commercial-property-guides/commercial-property-buyers-guide/buying-a-commercial-property-drafting-a-heads-of-terms-hots">"MOVEHUT Commercial Property Guides: Drafting Heads of Terms"</a>.</cite><span title="ctx_ver=Z39.88-2004&amp;rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&amp;rft.genre=unknown&amp;rft.btitle=MOVEHUT+Commercial+Property+Guides%3A+Drafting+Heads+of+Terms&amp;rft_id=http%3A%2F%2Fwww.movehut.co.uk%2Fcommercial-property-guides%2Fcommercial-property-buyers-guide%2Fbuying-a-commercial-property-drafting-a-heads-of-terms-hots&amp;rfr_id=info%3Asid%2Fen.wikipedia.org%3AHeads+of+terms" class="Z3988"></span></span> </li> <li id="cite_note-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-5">^</a></b></span> <span class="reference-text">UK Legislation, <a rel="nofollow" class="external text" href="https://www.legislation.gov.uk/ukpga/1989/34/section/2">Law of Property (Miscellaneous Provisions) Act 1989</a>, section 2, accessed 2 January 2021</span> </li> <li id="cite_note-ss-6"><span class="mw-cite-backlink"><b><a href="#cite_ref-ss_6-0">^</a></b></span> <span class="reference-text">Stephensons Solicitors LLP, <a rel="nofollow" class="external text" href="https://www.stephensons.co.uk/site/businesses/srvrealestate/property-guides/benefits_and_risks_heads_terms/">Benefits and risks of using heads of terms</a>, accessed 2 January 2021</span> </li> </ol></div></div> <style data-mw-deduplicate="TemplateStyles:r1271159938">.mw-parser-output .asbox{position:relative;overflow:hidden}.mw-parser-output .asbox table{background:transparent}.mw-parser-output .asbox p{margin:0}.mw-parser-output .asbox p+p{margin-top:0.25em}.mw-parser-output .asbox-body{font-style:italic}.mw-parser-output .asbox-note{font-size:smaller}.mw-parser-output .asbox .navbar{position:absolute;top:-0.75em;right:1em;display:none}.mw-parser-output :not(p):not(.asbox)+style+.asbox,.mw-parser-output :not(p):not(.asbox)+link+.asbox{margin-top:3em}</style><div 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