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Heads of terms

This Practice Note considers heads of terms (also known as a memorandum of understanding (MoU), letter of intent (LOI), comfort letter, pre-contract protocol, term sheet or heads of agreement) in the context of commercial deals. It considers what heads of terms are, how the courts determine whether heads of terms are legally binding, the commonly used phrase ‘subject to contract’, creating legally binding provisions, the duty to negotiate in good faith, and provisions typically included. It also considers which terms are usually intended to be legally binding and provides drafting advice on what to consider and include. This Practice Note also considers how to supersede the heads of terms in the final contract.For heads of terms for a commercial deal and drafting notes, see Precedent: Heads of terms—commercial contracts.We have produced a toolkit which is a comprehensive, interactive resource to managing contracts at each of their key lifecycle stages: negotiation, creation, review, variation and termination. It provides an overview of the key considerations and the processes for negotiating, reviewing, varying, assigning, novating or terminating those contracts. Each...

Pre-contractual representations and statements

This Practice Note considers statements (whether oral or written) made by one party to another prior to entering into a formal contract and gives an overview of the circumstances in which that statement could be said to form part of the contract or give rise to other remedies. For further information, see Practice Note: Contract interpretation—admissibility of pre-contractual negotiations and statements.Potential rights and remedies arising from pre-contractual statements made before a contract is signedStatements are often made by one party to another as part of the pre-contract negotiations (for example as part of a sales process). Disputes can arise around whether, or which, statements are intended to form part of the contract or potentially give rise to other remedies. Depending on the facts, a pre-contractual statement might take legal effect (and give rise to remedies) as follows:•Contractual terms: In certain circumstances the statement may: ◦be construed to be a term of the contract. Written agreements will often contain exclusion clauses and/or entire agreement clauses in an effort to prevent pre-contractual...

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Non-circumvention clause—joint bids

Non-circumvention clause—joint bids 1 To the extent permitted by applicable law, each party agrees that, throughout the Term, it shall not, whether on its own, or with or through any other entity: 1.1 submit any other bid to the Customer in relation to the