Are Heads of Terms Legally Binding in Ireland?

Last updated October 2026. General information only, not legal advice.

Usually not, but only because the document says so. Heads of terms (also called a letter of intent, term sheet or memorandum of understanding) are presumed in Irish practice to be a non-binding record of what the parties intend to put into a final contract, and “subject to contract” is the conventional way of keeping them that way. The presumption is not automatic: a signed heads document covering all the essential terms, without those words, can be found to be a binding contract, and parties routinely make a few clauses, such as confidentiality and exclusivity, expressly binding. The Heads of Terms / Letter of Intent template is a self-complete document that separates the binding and non-binding parts clearly.

What the Irish courts have said

The leading authority is Boyle v Lee [1992] 1 IR 555, where the Supreme Court held that the “subject to contract” formula should protect parties from contractual liability until a formal contract is executed, and found no concluded agreement where the parties had agreed a deposit would be paid but not its amount. A document that leaves a material term open, or is expressly subject to contract, will not generally be enforced.

The limits appeared in Supermacs Ireland Ltd v Katesan (Naas) Ltd [2000] 4 IR 273. Typed “headings of agreement” for a £4 million sale of fast-food outlets had been signed only by a mediator, and later solicitors’ letters were marked “subject to contract”. The Supreme Court refused to strike out the claim: whether a concluded oral agreement existed, and whether the headings were a sufficient note of it, were issues for trial. Later “subject to contract” letters do not, by themselves, guarantee there is no contract.

Most recently, in ACE Autobody Ltd v Motorpark Ltd [2026] IESC 9, the Supreme Court held that parties who agreed terms “subject to lease” were not bound until the lease was executed, even though one side had taken possession and invested in the premises, and described the circumstances in which conduct overrides such wording as rare.

Which clauses are usually made binding

Heads of terms typically state that nothing in them is binding except specified clauses: confidentiality, exclusivity or a “lock-out” period during which the seller will not negotiate with anyone else, costs, and governing law. Irish law enforces a lock-out agreement for a fixed period supported by consideration. In Triatic Ltd v Cork County Council [2006] IEHC 111, the High Court held the council bound to deal exclusively with the plaintiff during the agreed exclusivity period, but once it expired the parties were merely in negotiation with no contractual relationship.

What the courts will not enforce is a bare agreement to negotiate, or to negotiate in good faith, because it is too uncertain. Triatic followed Walford v Miles on that point, and the Court of Appeal in Flynn v Breccia [2017] IECA 74 confirmed there is no general implied duty of good faith in Irish contracts. If you want an obligation enforced, define it precisely.

Land, writing and stamp duty

Where the deal concerns land or a lease, section 2 of the Statute of Frauds (Ireland) 1695 requires a signed written note or memorandum before any contract can be enforced, which is why property heads are always marked “subject to contract / contract denied”. Because non-binding heads are not a conveyance or a contract for sale, stamp duty does not normally arise on them. Heads of terms for a property deal, a business sale or a shareholder arrangement should be reviewed by a solicitor before anyone relies on them; the Law Society’s Find a Solicitor service lists practitioners by area. For the clauses that go into the final agreement, see our guide to how to write a business contract in Ireland.

Frequently asked questions

What does subject to contract mean in Ireland?

It signals that the parties do not intend to be bound until a formal written contract is signed. The Supreme Court in Boyle v Lee held that the formula should protect parties from contractual liability until that point.

Is a letter of intent legally binding?

Generally not, if it is expressed to be non-binding or subject to contract. But a letter that contains all the essential terms, is signed, and shows an intention to be bound can be a contract, and specific clauses such as confidentiality or exclusivity are often made binding on purpose.

Is an exclusivity agreement enforceable in Ireland?

Yes, where it is for a fixed period and supported by consideration. In Triatic v Cork County Council the High Court enforced an exclusivity period but held that an agreement to keep negotiating after it expired was unenforceable.

Sources: Boyle v Lee [1992] 1 IR 555 · Supermacs Ireland Ltd v Katesan (Naas) Ltd [2000] 4 IR 273 · Triatic Ltd v Cork County Council [2006] IEHC 111 · Statute of Frauds (Ireland) 1695, s.2

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