Heads of Terms, Heads of Agreement, Letters of Intent: they all refer to and mean the same sort of thing.
They serve the same purpose.
In business, they also go by the names of “term sheets”, “memorandum of understanding”, “letters of understanding”, “heads of agreement”, “heads of terms agreement”, “letters of interest” and “term sheets”.
In the construction industry, heads of terms are often wrapped up and packaged as letters of intent or “LOIs” for short. It’s just different terminology with the same meaning.
They’re usually exchanged by 2 businesses to reach what businesses sometimes call the “commercial agreement” – to distinguish from the sort of agreement which is legally binding. (We’ve included 3 templates below: the non-legally binding variety, contractual form and a Letter of Intent)
Once you have commercial agreement with Heads of Terms, businesses go on to prepare the formal contract document.
Here’s how. And when they can become legally binding by accident.