The Last Gasp: Dave discovers Heads of Terms.

Simon is surprised one day, on walking into the FinalVinyl shop, to find the counter unattended; surprise turns to alarm when he hears Dave feebly calling out “last gasp” from the back, and Simon rushes into the office. There, Dave is sitting calmly at the computer with the words “Last-Gasp Records” at the head of the screen he is looking at. And Simon realises that the weakness of Dave’s cries was the product of an overactive imagination.

“Looks interesting”, he says, pretending he’s not embarrassed.

“It is”, replies Dave. “I heard last night that Steve Daws – the guy who used to be in Steve Daws and the Dockers, and now owns Last-Gasp Records – is thinking of retiring.”

“I’m not surprised – he’s getting on a bit, isn’t he? That record label has been going for years. Where did you hear that?”

“At the Round Table…”

“Shouldn’t that be the ’turn’ table?” Simon interrupts, with a look on his face which clearly suggests he is expecting applause.

“…at the Round Table”, continues Dave, firmly. “Anyway, I wondered if he might be interested in selling up.”

“You’re right, that could be just the thing for you. What would you do – take over his shop, take the stock, his customer lists, or what?”

Dave is instantly less enthusiastic. “I hadn’t thought about that.”

“Well you should – if you’re going to make a serious bid, you should know what you’re bidding for.”

“How do I work that out in advance, though?”

“Well you could start by looking on Simplify the Law. They’ve got some really useful stuff on Heads of terms.”

“What are they?”

“They’re sort of negotiating documents – you use them to lay the groundwork for a detailed contract. So you could send Last Gasp a letter which sets out the general areas you want to negotiate about if you’re thinking about reaching a deal. And then you’d know at an early stage whether you were barking up the wrong tree.”

“How come?”

“Well let’s say you wrote and said that you wanted to talk to him about buying his stock, but he didn’t want to sell the stock without handing over the premises; or say if you knew that you wanted the premises but you wanted some work done on them first – well, using the heads of terms you’d be able to sketch out the essentials early on.”

“So those things you mentioned – they’d be these ‘heads of terms’?”


“Well that’s daft. I can just pick up the phone and do that without setting it out on paper.”

“You can – but I wouldn’t.”

“Why not?”

“Two or three reasons – and you can work them out for yourself.”

And, stubbornly, Simon refuses to expand further, leaving Dave to find out – as he quickly does from Simplify the Law – the value of exclusivity and confidentiality in pre-contract negotiations, and the importance of being clear which elements of those negotiations have legal effect and for how long.

And Dave goes further – soon drafting a Heads of Terms letter to send to Steve at Last Gasp. And then he sits back, reflecting that being in business can be pretty rock ‘n’ roll.

View the solution heads of terms

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