Heads of Terms for a commercial transaction are preliminary terms that drive many of the workflows and set the tone and spirit of a negotiation. The Chancery Lane Project, a collaborative effort of UK lawyers to develop new contracts and model laws to help fight climate change, has published model heads of terms language positioning climate change issues as a key consideration for any deal team. This will be particularly relevant where one or both of the parties has a publicly stated net zero target. The clauses will mean that a deal team will have to undertake specific due diligence relating to climate change issues and make known their position on these issues to the counterparty. This makes the evaluation and allocation of climate change risk a key part of any transaction.
The model clause is available in the attached volume at page 51 (“Hanley’s Clause”).