A Term Sheet is a legal agreement that sets out the basic terms and conditions of a proposed investment transaction. Not legally binding, a term sheet provides the founders and investors of a company an equal chance of presenting their views regarding a future investment to be made.
As a fact, Term Sheet is not legally binding upon any of its parties. However, the Term Sheet is backed by certain legally binding agreements that define the complete process of a particular investment transaction. One such document is the Shareholder and Share Subscription Agreements (SSSHA).