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
Delayed, derailed and devalued
How the UK’s planning crisis is undermining British manufacturing.
How much does it cost to build a house?
A brief run down of key considerations from a London based practice.
The need for a National construction careers campaign
Highlighted by CIOB to cut unemployment, reduce skills gap and deliver on housing and infrastructure ambitions.
AI-Driven automation; reducing time, enhancing compliance
Sustainability; not just compliance but rethinking design, material selection, and the supply chains to support them.
Climate Resilience and Adaptation In the Built Environment
New CIOB Technical Information Sheet by Colin Booth, Professor of Smart and Sustainable Infrastructure.
Turning Enquiries into Profitable Construction Projects
Founder of Develop Coaching and author of Building Your Future; Greg Wilkes shares his insights.
IHBC Signpost: Poetry from concrete
Scotland’s fascinating historic concrete and brutalist architecture with the Engine Shed.
Demonstrating that apprenticeships work for business, people and Scotland’s economy.
Scottish parents prioritise construction and apprenticeships
CIOB data released for Scottish Apprenticeship Week shows construction as top potential career path.
From a Green to a White Paper and the proposal of a General Safety Requirement for construction products.
Creativity, conservation and craft at Barley Studio. Book review.
The challenge as PFI agreements come to an end
How construction deals with inherited assets built under long-term contracts.
Skills plan for engineering and building services
Comprehensive industry report highlights persistent skills challenges across the sector.
Choosing the right design team for a D&B Contract
An architect explains the nature and needs of working within this common procurement route.
Statement from the Interim Chief Construction Advisor
Thouria Istephan; Architect and inquiry panel member outlines ongoing work, priorities and next steps.
The 2025 draft NPPF in brief with indicative responses
Local verses National and suitable verses sustainable: Consultation open for just over one week.