A term sheet is a bulleted list proposed by any of the parties which includes the features, terms and conditions of the deal. The terms and conditions mentioned in this are non-binding in nature because these can be modified after future negotiations between the parties. It is the process before preparing and signing the final agreement. It will reduce the time taken for negotiating the final business agreement because it provides a framework for the final contract.
A term sheet may consist the following: -
A term sheet provides a framework to discuss the differences on the significant areas of any major business agreement. It helps in drafting of the actual agreement. Therefore, it prevents the unnecessary expenditure on a company's resources.
We do not have to re draft a contract repetitively if we use the term sheet prior to it. With the help of term sheet, we put out a plan that can be discussed and modified. Finally, we can prepare the final contract based on term sheet data and it will save us time.