Module 1 · Chapter 2

Heads of Terms and “Subject to Contract”

An agreed price for land binds nobody until contracts are exchanged. Heads of terms map the deal without binding it, except for a lock-out, which can bind the seller for a fixed time.

≈ 11 min read 8-question test

In this chapter

  • Why an agreed price binds nobody until exchange
  • What heads of terms record, and the one paragraph that binds
  • When a lock-out ends, and how to keep track of it

2.1Heads of terms in one paragraph

Before the solicitors draft a contract for land, the buyer and the seller usually sign heads of terms. This short paper records who sells what to whom, for how much and when. It is marked “subject to contract”, the label that says nobody means to be bound until exchange.

The heads bind only the paragraphs they say bind. Here that is a lock-out: the seller's promise not to deal with anyone else for a fixed period.

Key point

Heads of terms bind nobody, except the paragraphs they name. The price in them is a figure both sides hope to sign. Either side may still change it.

Also in this chapter

  1. Why an agreed price binds nobody
  2. What heads of terms record
  3. The lock-out: the one paragraph that binds
  4. How the eight weeks were agreed
  5. When the lock-out ended
  6. The Contract replaces the heads
  7. Your job

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