A business example
An investor offers funding with a proposed valuation, board seat and an exclusivity clause.
Commercial proposal
The document sets out funding, ownership and governance terms.
Binding parts
The parties identify which clauses, such as agreed exclusivity, are intended to bind them.
Definitive documents
Open points and conditions are carried into the final transaction process.
What this shows
Calling a document a term sheet does not make every clause non-binding. The wording and intended effect need to be understood before signing.
What it is often confused with
Some clauses may be binding even where the investment proposal is largely non-binding.
What to look at in your business
Identify binding clauses, open conditions and terms still to be negotiated.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026