It is basically a non- binding document. It codifies the discussion and things parties have agreed to informally, not legally. It is similar to Letter of intent and its focuses on parties’ intention. Once the parties reach an agreement on the details laid out in the term sheet, a binding agreement or contract that conforms to the term sheet details is then drawn up.
This Term Sheet summarizes the principal term of a proposed investment in the company. This Term sheet is not legally binding expects for terms stated in ________ of this term sheet and there will be no obligation to issue or subscribe for shares in the Company until a binding investment agreement is signed by the both the parties.