Heads of terms
"Heads of Terms" refers to a non-binding document outlining the key terms and conditions agreed upon by parties before the finalisation of a formal contract. It serves as a preliminary agreement that sets the framework for further negotiations and drafting of the detailed contract.
It summarises the principal points of the agreement between the parties,and establishes a basis for detailed negotiations and drafting of the formal contract, ensuring that both parties are on the same page regarding the key aspects. This helps to focus discussions on important issues and prevents misunderstandings or disputes later in the process.
It might include terms such as:
- The scope of work.
- Project timelines.
- Payment terms and conditions.
- Roles and responsibilities of the parties involved.
- Confidentiality provisions.
- Any conditions precedent (conditions that must be met before the agreement becomes effective)
- Procurement and contract strategy. This should include carefully thought out risk allocation (procurement routes might involve bills of quantities, schedules of activities, target cost formulae and part design responsibility).
- Choice of contract.
- Conditions of engagement for consultants.
- Design and collateral warranties.
- Incentive mechanisms.
- Abortive terms.
While Heads of Terms indicate a mutual intent to proceed, they are generally not legally binding except for certain clauses, such as confidentiality and exclusivity, which might be explicitly stated as binding.Heads of Terms can be particularly useful in complex construction projects where multiple parties are involved, helping to streamline the process and set clear expectations before committing to a detailed and binding contract.
[edit] Related articles on Designing Buildings
Featured articles and news
We're expanding our collaborative mission by launching DB Intelligence, an exclusive market research advisory panel. Built environment professionals can now get paid to share their expertise on industry trends, products and services.
Panel members receive direct financial incentives for participating in research projects like short surveys, 1-2-1 interviews and focus groups. Register today to shape the future of the construction sector.
Planning condition discharge in England and Wales
A brief exoplanation from a building compliance expert, with further links.
Overheating guidance and tools for building designers
Guidance for dealing with element of building fabric control that have increasing importance.
Shading for housing, a design guide
From the Good Homes Alliance and British Blind and Shutter Association.
UK Standard Skills Classification (SSC)
A shared framework for describing skills needs.
Social media ban consultation comes to close
CIOB urges UK Government to consider social media’s role in careers guidance in ban debate.
The latest of eight Skills England apprenticeship units
The addition of battery manufacturing welcomed by ECA with a warning about the risks of fast-tracked apprenticeship units.
Building Control Independent Panel final report
A precis of a key report led by Dame Hackitt with full recommendations and link to the government response.
Building Safety recap April, 2026
A short and longer run-through of the month, with links to further information and sources.
CIAT May 2026 briefing.
From medieval scribes to modern word art.
ECA welcomes crackdown on late payment and push for clean energy, whilst CIOB seek fixed cladding removal timeframes.
Cyber Security in the Built Environment
Protecting projects, data, and digital assets: A CIOB Academy TIS.
Managing competence in the built environment
ITFG publishes new industry guide on how to meet the ICC principles.
The UK's campaign to reduce noise pollution: Mythbusting, articles and topic guides.