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Heads of terms (or "hensigtserklæring" in Danish) is a preliminary document that outlines the key points of a future agreement before creating the full contract. It captures the main commercial terms that parties have agreed on during negotiations, making it easier to move forward with the detailed legal documentation.

In Danish business practice, these documents help prevent misunderstandings and keep negotiations on track, though they're usually not legally binding. Companies often use them for real estate deals, business acquisitions, and joint ventures. The Danish Contract Act recognizes their value in commercial dealings, even when they're meant as stepping stones rather than final agreements.

Use Heads of terms when you're starting complex business negotiations, especially for high-value deals like property developments, company mergers, or joint ventures in Denmark. It's particularly valuable when you need to secure early agreement on key commercial points before spending time and money on detailed legal documentation.

The document proves especially useful during multi-stage negotiations where parties need clear milestones, or when dealing with international partners who might have different legal expectations. Many Danish businesses create Heads of terms to outline deal structures, price mechanisms, and key conditions - helping prevent costly misunderstandings and keeping negotiations focused on essential terms.

• Non-binding memoranda: The most common type in Denmark, outlining basic deal terms while explicitly stating no legal obligations arise
• Binding preliminary agreements: Used when parties want certain terms (like confidentiality or exclusivity) to be immediately enforceable
• Term sheets with conditions: Popular in Danish M&A deals, listing specific requirements that must be met before proceeding
• Framework Heads of terms: Common in construction and development projects, establishing broad principles for multiple future contracts
• Letter of intent style: A more formal variation often used in international deals, combining Heads of terms with clear commitment statements

• Business Executives: Usually initiate and lead negotiations, setting key commercial terms and strategic direction for the deal
• Corporate Lawyers: Draft and review the Heads of terms to ensure clarity and protect their client's interests under Danish law
• Investment Bankers: Often involved in larger transactions, helping structure deals and advising on financial terms
• Real Estate Developers: Frequently use these documents for property transactions and development projects in Denmark
• Board Members: Review and approve significant Heads of terms before allowing management to proceed with detailed negotiations

• Basic Deal Information: Gather details about all parties involved, including company registration numbers and authorized representatives
• Commercial Terms: List key business points like price, payment terms, and timelines that both parties have discussed
• Deal Structure: Determine the transaction type and any special conditions under Danish corporate law
• Due Diligence Needs: Identify what information needs to be exchanged and any confidentiality requirements
• Internal Approvals: Check what board or management approvals are needed before signing
• Documentation Platform: Use our smart template system to generate a legally-sound Heads of terms that includes all required elements

• Party Details: Full legal names, registration numbers, and authorized representatives of all involved entities
• Deal Scope: Clear description of the transaction or relationship being negotiated
• Binding Status: Explicit statement on which terms are legally binding and which are subject to final agreement
• Confidentiality: Terms governing the use and protection of shared information during negotiations
• Timeline: Key dates, including negotiation period and expected completion
• Exclusivity: Any restrictions on negotiating with other parties
• Governing Law: Clear statement that Danish law applies to the agreement
• Signature Block: Space for authorized representatives to sign and date

While Heads of terms and Business Acquisition Agreement both deal with business transactions, they serve distinctly different purposes in Danish commercial law. Here are the key differences:

• Legal Status: Heads of terms typically remain non-binding and preliminary, while Business Acquisition Agreements are formal, binding contracts that finalize the deal
• Detail Level: Heads of terms outline key commercial points briefly, whereas Business Acquisition Agreements contain comprehensive legal provisions and warranties
• Timing: Heads of terms come early in negotiations to establish framework, while Business Acquisition Agreements represent the final, executed agreement
• Due Diligence: Heads of terms often precede due diligence, while Business Acquisition Agreements incorporate findings from completed due diligence
• Risk Allocation: Business Acquisition Agreements include detailed risk allocation mechanisms, while Heads of terms typically avoid specific risk discussions