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
UKCW London to tackle sector’s most pressing issues
AI and skills development, ecology and the environment, policy and planning and more.
Managing building safety risks
Across an existing residential portfolio; a client's perspective.
ECA support for Gate Safe’s Safe School Gates Campaign.
Core construction skills explained
Preparing for a career in construction.
Retrofitting for resilience with the Leicester Resilience Hub
Community-serving facilities, enhanced as support and essential services for climate-related disruptions.
Some of the articles relating to water, here to browse. Any missing?
Recognisable Gothic characters, designed to dramatically spout water away from buildings.
A case study and a warning to would-be developers
Creating four dwellings... after half a century of doing this job, why, oh why, is it so difficult?
Reform of the fire engineering profession
Fire Engineers Advisory Panel: Authoritative Statement, reactions and next steps.
Restoration and renewal of the Palace of Westminster
A complex project of cultural significance from full decant to EMI, opportunities and a potential a way forward.
Apprenticeships and the responsibility we share
Perspectives from the CIOB President as National Apprentice Week comes to a close.
The first line of defence against rain, wind and snow.
Building Safety recap January, 2026
What we missed at the end of last year, and at the start of this...
National Apprenticeship Week 2026, 9-15 Feb
Shining a light on the positive impacts for businesses, their apprentices and the wider economy alike.
Applications and benefits of acoustic flooring
From commercial to retail.
From solid to sprung and ribbed to raised.
Strengthening industry collaboration in Hong Kong
Hong Kong Institute of Construction and The Chartered Institute of Building sign Memorandum of Understanding.
A detailed description from the experts at Cornish Lime.