Whenever an important business transaction is contemplated, a letter of intent (LOI), summary of indicative terms or a term sheet should be one of the first things on the parties’ checklist. (The checklist is the first!) Term sheets are a topic-by-topic summary of the principal business terms of the deal – – whether a merger, acquisition, investment or license deal. A 2- or 3-page term sheet is an efficient, low-cost, way of identifying major business points and to lay out a plan of action to complete the transaction. Term sheets can be binding or non-binding, but even the non-binding ones have some “binding” provisions, such as confidentiality, costs and no-shop. Also, clients must be careful about unintentional commitments, such as “agreements to agree” or promises to proceed and negotiate in good faith. I prefer non-binding letters with a detailed description of terms (in grid form) attached. This is a vital tool to further discussion and to documentation of the transaction. Two final notes: (i) in 35 years of practice, I have never seen a client regret having a good term sheet at the outset of a deal but I have seen clients regret the lack of one and (ii) a term sheet, prepared by an experience lawyer early in the deal’s evolution, will save the client legal fees every time.