Also known as letters of intent, memoranda of understanding or heads of agreement. Term sheets are commonly entered into at the beginning of a transaction, once preliminary terms have been agreed and before commencement of detailed due diligence and the drafting of definitive agreements (which is where the parties begin to incur significant costs). A term sheet is evidence of the serious intent of the parties. It is an agreement that sets out the terms of the commercial transaction as agreed in principle between the parties. It also outlines the timetable and obligations of the parties. The term sheet should be “non-binding” which means that it does not legally compel the parties to conclude the deal on those terms or even at all.

[See here for a content outline of a typical Heads of Agreement]

Step 4 - Due Diligence Process | Step 6 - Licence Agreement