A set of heads of agreement, heads of terms, or letter of intent is a non-binding document outlining the main issues relevant to a tentative sale, partnership, or other agreement.
[1] A heads of agreement document will only be enforceable when it is adopted into a parent contract and is subsequently agreed upon, unless otherwise stated.
[2][3] A key function of Heads of Terms is to assist in the identification of critical issues as early as possible during negotiations which could stop a transaction going ahead.
The main purpose of the heads of terms is to identify and highlight the requirements of both the seller and the purchaser of the property.
[4] The heads of terms normally contains the following information: An agreement made in writing, signed by all parties, including the terms expressly agreed by the parties and evidencing offer, acceptance, consideration and intention to create legal relations is likely to be treated as a binding contract because such contents reflect the requirements of the Law of Property (Miscellaneous Provisions) Act 1989, which states (in section 2) that "a contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each".