A neutral-form Heads of Agreement (also called Heads of Terms) for the sale and purchase of a business, recording the parties' commercial intentions on a subject-to-contract basis and including a deposit from the Buyer, for use in England & Wales.
How to use this template - Replace every
[SQUARE-BRACKET]field before use. - The commercial terms are "subject to contract" and not binding, the binding deal is the later sale and purchase agreement. Certain clauses (confidentiality, exclusivity, the deposit terms, costs) are made binding (clause 9). - Note: for the binding clauses to be enforceable, the agreement must be supported by consideration (for example, the deposit commitment) or executed as a deed, and the clauses must be sufficiently certain. Simply labelling a clause "binding" is not enough on its own. - Be clear whether the sale is of shares or assets, they differ significantly. - Have a solicitor review before signing, especially the deposit and exclusivity terms.
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HEADS OF AGREEMENT, Sale of [BUSINESS / COMPANY NAME]
Date: [DATE] · Status: Subject to contract (save for the binding clauses in clause 9)
Parties: (1) [SELLER NAME] ("Seller"); (2) [BUYER NAME] ("Buyer").
1. The transaction. The Seller intends to sell, and the Buyer to buy, [the entire issued share capital of [COMPANY] / the business and assets described in Schedule 1] (the "Transaction").
2. Price. The proposed consideration is £[AMOUNT], payable [on completion / as to £[AMOUNT] on completion and the balance [DETAILS]], subject to [adjustments / due diligence].
3. Deposit. The Buyer will pay a deposit of £[AMOUNT] to [the Seller's solicitors as stakeholder], to be [credited against the price on completion / returned if the Transaction does not proceed for [REASONS] / forfeited if the Buyer withdraws other than for [REASONS]]. (This clause is binding, see clause 9.)
4. Due diligence. The Buyer will carry out legal, financial and commercial due diligence, and the Seller will provide reasonable access and information.
5. Conditions. Completion is conditional on [satisfactory due diligence, the parties agreeing and signing a sale and purchase agreement (SPA), and any necessary consents/approvals].
6. Timetable. The parties aim to exchange the SPA by [DATE] and complete by [DATE].
7. Exclusivity. For [NUMBER] weeks from the date of these Heads, the Seller will not negotiate with, or solicit offers from, any other party. (Binding, clause 9.)
8. Confidentiality. Each party will keep the Transaction and information disclosed confidential. (Binding, clause 9.)
9. Binding and non-binding terms. Clauses 3 (Deposit), 7 (Exclusivity), 8 (Confidentiality), this clause 9, and clause 10 (Costs and governing law) are legally binding. All other clauses record intentions only and are not legally binding; no binding obligation to complete the Transaction arises until a signed SPA is in place.
10. Costs and governing law. Each party bears its own costs. These Heads are governed by the law of England and Wales, whose courts have jurisdiction.
Signatures
Signed by [SELLER NAME]: __________________ Date: [DATE]
Signed by [BUYER NAME]: __________________ Date: [DATE]
Schedule 1, Business and assets (for an asset sale)
--- This template is a starting point and not legal advice. The binding/non-binding split and the deposit terms are critical, have a qualified solicitor review and adapt it before use. Governing law: England & Wales.