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welcome to which draft this is Jason mark Anderman today we're gonna tell you all about issues that come up with a term sheet in this case we'll dive into our term sheet template make you aware of these particular concerns in particular what you're gonna be wanting to focus in on is the common situation where you just can't seem to arrive at a deal usually that involves one of three scenarios the first one is things are just really complex and you don't have the ability to figure out with the other side exactly how both parties stand on every possible issue the second situation that comes up from time to time is where you just can't seem to get the other party to focus in on exactly what they care about and you really need a framework to crystallize things and make things really clear as to what the deal is gonna be and the third situation is where they may just send you a term sheet template and you need to respond and you might want to respond with one of your own that really spells out exactly how you feel so the bottom line is ultimately what you're talking about here is coming up with the definitive contract and this term sheet template is your initial framework to allow you to then negotiate whether or not you're going to agree on a definitive contract so you want to spout exactly what you're going to be negotiating this is one I've negotiated in the past an application service provider Human Resources technology custom development agreement and what's the point of that well in this case it was to create customized online tools that facilitate core Human Resources processes such as recruitment benefits and talent management that gives you good background as to what the parties are discussing the big thing to remember here though is ultimately you might not arrive at a deal this is really just giving a basis for negotiations and nothing more so you want to have a cause in here that it says this and says hey a definitive contract is not required nothing about this is going to be interpreted to require the parties to enter into deal you might have one you might not and you don't want to be in a situation where the other party says hey you agreed to the deal I relied on that I went and bought raw material to produce the products to sell you or I went and signed up clients to who I thought I could service with the software are you gonna create for me and now I'm out money and those are my damages I'm gonna see you for that you want to make sure in those kinds of situations they can't say that they relied on any representation that you did reach a deal and that's why this cause is really important the other thing that you want to think a lot about here is confidentiality and what's important with this is a lot of people like to throw in a whole confidentiality agreement into the term sheet template it's a bad idea for a couple of reasons number one chances are especially if you're in an industry where people do business together a lot you've already got a confidentiality agreement with that other party that you signed in the past if you haven't then it's a good idea to sign a compound agreement separately because you can incorporate it by reference in whatever agreements you might deal with them in the future instead of having to renegotiate the confidentiality terms over and over and over again that's why I like to do stand alone complex yachty agreements with parties and you just incorporate by reference by saying hey the one with this name that was on this date we're gonna just incorporate it by reference into this agreement and boom you're done last thing you want to think about with term sheet template is limiting your liability so we talked about before where someone might sue you by saying hey you agreed to the steal even though you know you did it and relied on it for damages and then they go and see you well there's two things they can do in those situations I well you can do those situations to protect yourself you can include an elimination liability provision an exclusion of consequential damages and those are the really huge damages that can be much much more than the amounts you thought you're going to realize on the deal that you want to knock out like punitive or exemplary you have exemplary damages the other situation is you can just protect yourself for a flat out number you can insert a hard cap which is a definite dollar amount that says this amount of dollars we're not going to pay above that so our liability is limited to ten thousand dollars and that's it end of story and that's the kind of issue that you might be concerned about as well in a term sheet well that sums up the issues that you'd care about in a term sheet template from a legal standpoint thing to think a bit about is including an exhibit at the bottom of your deal and that would kind of just spell out some suggested provisions that allows you to negotiate what are those provisions probably think a lot about what's the exact description of the goods and services to be provided how much is going to be paid and when will it be paid when will everything be delivered what's the timeline any assumptions that the customer has to feel to allow the vent fulfilled so the vendor can do things in a timely manner and ultimately you want to hash this out to create a basis of trust between the parties that's pretty much the term sheet template