In a
commercial property transaction in the UK, a heads of agreement is often known as the
heads of terms (
HOTS). 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. There are a number of advantages of using the heads of terms. For instance, by carrying this out, both parties will fully understand what they are subject to, and can reduce or abolish any misunderstandings from either party. The heads of terms normally contains the following information: • Details of the property seller • Details of the property purchaser • Address of the commercial property • Details of the commercial property • The purchase price both parties have agreed to • The payment information • Any special conditions • Transaction completion date 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". ==See also==