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Heads of terms outline the key points of a future contract before the final agreement is drafted. They're commonly used in Kiwi business deals, property transactions, and commercial leases to get the main details sorted early. Think of them as a roadmap that captures what both parties want to achieve.

While not usually legally binding themselves, these documents speed up negotiations and reduce misunderstandings. They typically cover essential elements like price, timeframes, and any special conditions. In NZ commercial practice, they're also known as Letters of Intent or Memoranda of Understanding, and smart businesses use them to keep complex deals on track while lawyers prepare the final contracts.

Use Heads of terms when you're entering complex business negotiations, especially for high-value deals like commercial property purchases or company mergers. They're particularly valuable in time-sensitive situations where you need to lock down the main points quickly while detailed contracts are being prepared.

These documents prove essential when dealing with multiple stakeholders, international parties, or complicated financial arrangements. For example, when buying a business in NZ, Heads of terms help define the purchase price, payment structure, and key conditions before spending money on detailed due diligence and full legal documentation. They also provide a clear framework for your lawyers to draft the final agreement.

• Basic Heads of terms: Outlines fundamental deal points like price, parties, and timeline - perfect for straightforward transactions
• Detailed Commercial Heads: Includes comprehensive business terms, conditions precedent, and specific performance metrics - suited for complex business sales
• Property Transaction Heads: Focuses on real estate specifics like land descriptions, zoning requirements, and development conditions
• Joint Venture Heads: Covers ownership structure, profit sharing, and management rights - common in Kiwi business partnerships
• Investment Term Sheets: Specifically structured for capital raising, including valuation, investor rights, and exit mechanisms

• Business Owners and CEOs: Often initiate and negotiate the key commercial terms, setting strategic direction for deals
• Commercial Lawyers: Review and refine the terms, ensuring legal protection while maintaining commercial intent
• Property Developers: Use them to outline development projects and secure initial agreements with investors or contractors
• Corporate Finance Teams: Draft financial terms and conditions for business acquisitions or investments
• Real Estate Agents: Help prepare initial terms for significant commercial property transactions
• Business Brokers: Facilitate agreement on key points during business sales and acquisitions

• Essential Details: Gather full legal names and addresses of all parties, plus key commercial terms like price, timeline, and payment structure
• Deal Specifics: Document any special conditions, warranties, or critical deadlines that will affect the final agreement
• Due Diligence: List required documents, permits, or approvals needed before proceeding to final contracts
• Legal Framework: Specify which terms are binding vs non-binding, and include confidentiality requirements
• Sign-off Process: Identify who needs to review and approve the document from each organization
• Next Steps: Outline the process for moving from heads of terms to final agreement, including timeframes

• Party Details: Full legal names, addresses, and company registration numbers of all involved parties
• Subject Matter: Clear description of the transaction, asset, or business arrangement being discussed
• Key Terms: Essential commercial points like price, payment terms, and completion timeline
• Binding Status: Clear statement about which provisions are legally binding and which are not
• Confidentiality: Terms protecting sensitive information shared during negotiations
• Exclusivity Period: Time frame during which parties cannot negotiate with others
• Governing Law: Confirmation that New Zealand law applies to the agreement
• Termination Rights: Conditions under which either party can end negotiations

Heads of terms are often confused with Terms and Conditions, but they serve distinctly different purposes in New Zealand business law. While both documents set out important agreements, their scope, timing, and legal effect differ significantly.

• Legal Binding Nature: Heads of terms are typically non-binding preliminary agreements outlining key deal points, while Terms and Conditions are fully binding contracts governing ongoing business relationships
• Timing of Use: Heads of terms come early in negotiations as a framework for future detailed agreements, whereas Terms and Conditions serve as the final operating rules
• Level of Detail: Heads of terms capture broad commercial points and major terms, while Terms and Conditions provide comprehensive details about rights, obligations, and procedures
• Duration: Heads of terms are temporary documents meant to bridge toward final contracts, while Terms and Conditions remain in force indefinitely until changed