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Heads of terms is a preliminary document that outlines the key points of a proposed business deal or agreement before creating the final contract. It captures the main commercial terms both parties have discussed and agreed upon, acting like a roadmap for the detailed agreement to follow.

In Indian business practice, these documents (also called MOUs or term sheets) aren't typically legally binding, except for specific clauses like confidentiality. While courts may reference them to understand the parties' original intentions, they mainly help keep negotiations on track and highlight potential deal-breakers early. Many Indian companies use them for property deals, joint ventures, and major business transactions.

Use Heads of terms when negotiating significant business deals in India, especially for complex transactions like mergers, property developments, or joint ventures. It's particularly valuable when dealing with multiple stakeholders or when you need to secure initial agreement on key commercial points before investing in detailed legal documentation.

The document proves essential during time-sensitive deals where parties need to show commitment to lenders or stakeholders while finalizing details. It's also valuable in cross-border transactions with international companies, helping bridge different legal systems and business practices. Many Indian corporations use it to secure board approvals or regulatory clearances while the main agreement is being drafted.

• Basic Commercial MOU: Most common type of Heads of terms in India, focusing on essential deal points and commercial terms while keeping legal obligations minimal
• Binding Term Sheet: Contains specific enforceable provisions like confidentiality and exclusivity clauses, while keeping main commercial terms non-binding
• Investment Term Sheet: Used primarily for venture capital and private equity deals, outlining valuation, shareholding, and investor rights
• Property Development HOT: Specialized version for real estate projects, covering land details, development rights, and profit-sharing arrangements
• Joint Venture Framework: Focuses on partnership structure, management control, and resource contributions between collaborating parties

• Business Owners and Entrepreneurs: Primary decision-makers who initiate and negotiate the key terms for their ventures or transactions
• Corporate Legal Teams: Draft and review Heads of terms to ensure alignment with company interests and Indian legal requirements
• Investment Bankers: Often coordinate complex deals and help structure the initial terms for mergers and acquisitions
• Private Equity Firms: Use term sheets to outline investment conditions and shareholder rights in funding rounds
• External Legal Counsel: Provide specialized expertise in drafting and negotiating terms, especially for cross-border transactions
• Company Directors: Review and approve the terms before proceeding with detailed agreements

• Company Details: Gather complete legal names, addresses, and registration numbers of all parties involved
• Deal Fundamentals: List key commercial terms, pricing, timelines, and any conditions precedent
• Internal Approvals: Confirm authority levels needed and obtain necessary board or stakeholder permissions
• Due Diligence: Review basic company documents and financial information of all parties
• Binding Elements: Identify which terms need legal enforcement, like confidentiality clauses
• Documentation: Use our platform to generate a legally sound Heads of terms that includes all mandatory elements and follows Indian legal requirements
• Timeline Planning: Set realistic deadlines for negotiation, signing, and moving to final agreements

• Party Information: Full legal names, registered addresses, and authorized signatories of all involved entities
• Deal Structure: Clear outline of the proposed transaction, including scope and commercial terms
• Non-Binding Statement: Express declaration that the document is not legally binding except for specific clauses
• Confidentiality Clause: Terms protecting sensitive information shared during negotiations
• Exclusivity Period: Duration during which parties cannot negotiate with others
• Governing Law: Specify Indian law and relevant jurisdiction for dispute resolution
• Timeline: Key dates for due diligence, final agreement, and deal completion
• Signature Block: Space for authorized representatives to sign and date

Heads of terms are often confused with Terms and Conditions, but they serve distinctly different purposes in Indian business law. While both documents set out rules and expectations, their scope, timing, and legal effects differ significantly.

• Legal Binding Nature: Heads of terms are primarily non-binding preliminary documents, except for specific clauses like confidentiality. Terms and Conditions are fully binding contracts from the start.
• Purpose and Timing: Heads of terms outline key points for future detailed agreements during negotiations. Terms and Conditions serve as final, operational rules for ongoing business relationships.
• Detail Level: Heads of terms capture broad commercial principles and major deal points. Terms and Conditions contain comprehensive, specific operational details and legal obligations.
• Flexibility: Heads of terms remain open to negotiation and modification. Terms and Conditions are fixed rules that typically offer limited room for individual negotiation.