| Commentary

25.2 Heads of agreement

| Commentary

25.2 Heads of agreement

The phrase ‘subject to contract’ is sometimes found in heads of agreement and other preliminary documents which are designed to summarise the main commercial terms of a proposed contract. This type of document is often called:

  1. (a)

        Heads of Agreement;

  2. (b)

        Heads of Terms;

  3. (c)

        Term Sheet;

  4. (d)

        Letter of Intent;

  5. (e)

        Comfort Letter; or

  6. (f)

        Memorandum of Understanding.

Documents of this kind do not have any automatic legal status. The intention of the parties may or may not be that such a document will be legally binding. Instead of just inserting the words ‘subject to contract’

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