Can “non-binding” Term Sheets Become Binding?

A recent arbitral award in the ongoing dispute between OYO Rooms and ZO Rooms/ Zostel declared a “non-binding” term sheet executed between the parties in 2015 (for the proposed acquisition of the business of ZO Rooms by OYO) a “binding” document. OYO and Zostel have reacted differently to the award in their public statements and the dispute seems far from over. However, given that parties may not always engage lawyers for drafting term sheets, the authors Anshuman Mozumdar & Ankur Kumar focus on some of the key precautions that parties may take, to mitigate the risk of “non-binding term sheets being characterized as “binding” documents.