Business Terms and Conditions — A Guide for Small Business Owners

What are business terms and conditions?

Business terms and conditions (T&Cs) are the contractual basis on which your business provides its products or services. They define the rules of the relationship between you and your customers — covering payment, delivery, liability, intellectual property, cancellation and dispute resolution.

Well-drafted T&Cs protect your business by setting clear expectations, limiting your liability where the law allows, ensuring you get paid on time and providing a clear process for when things go wrong. Without them, the terms of any contract are potentially unclear or governed by default rules that may not suit your business.

Consumer T&Cs vs B2B T&Cs

There is an important legal distinction between terms for consumers and terms for businesses. Consumer contracts are subject to strict rules under the Consumer Rights Act 2015 and other consumer protection legislation — certain terms cannot be excluded, unfair terms are unenforceable, and cancellation rights apply in many situations.

B2B (business-to-business) contracts offer more flexibility. Parties can agree to limit liability, exclude implied terms and define their own dispute resolution processes to a much greater extent than is possible with consumers. If your business deals with both consumers and other businesses, you may need separate sets of T&Cs.

Key clauses every business T&Cs should include

• Payment terms — when payment is due, what happens if it is late (interest, suspension of services), and how invoices are raised
• Scope of services or goods — what exactly is being provided and what is not included
• Liability cap — limiting your total liability to a defined amount (commonly the contract value or a fixed sum)
• Intellectual property — who owns work created in the course of the contract
• Cancellation and termination — when and how either party can end the arrangement and what happens to payments made
• Confidentiality — what business information must be kept confidential
• Dispute resolution — the governing law and how disputes will be handled
• Force majeure — what happens if performance is prevented by events outside your control

How to make T&Cs enforceable

A common problem is having perfectly drafted T&Cs that are not actually incorporated into contracts because customers were not properly made aware of them. To be enforceable, your T&Cs need to be incorporated by reference before the contract is agreed — not as an afterthought on the invoice.

Best practice includes: referencing T&Cs in your quotes, proposals and order confirmations; providing a link to or copy of the full T&Cs; obtaining acknowledgement or written acceptance; and displaying them clearly on your website if you take online orders.

If you are sending a contract for signature, including T&Cs as a schedule or appendix and having the other party sign and date them is the most secure approach.

Common mistakes

Using a template from the internet without adapting it. Generic templates frequently contain clauses that do not fit your business model, missing protections that are important for your sector, or provisions that conflict with how you actually operate.

Not incorporating T&Cs properly. Having them on your website is not enough if you take orders by email or telephone and never refer customers to them before the contract is formed.

Not reviewing them regularly. If your business model, pricing or services change, your T&Cs should be updated. Outdated T&Cs can create more confusion than no T&Cs at all.

Not having separate consumer and B2B versions when you serve both. Attempting to apply the same document to both often means the document does not properly serve either.

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