Whether you sell goods or provide services, launching a new venture, or scaling an established business, your terms of business are the legal backbone of every deal.
They define the relationship between you and your customers, what you’ll deliver, what they’ll pay, and what happens if things go wrong. When properly drafted, your terms help you stay in control, avoid costly disputes and protect your revenue. More than just a legal necessity, they’re a strategic tool for managing risk and supporting your business at every stage.
Our experienced commercial law solicitors can help you create a contract framework that limits liability, reduces risk, and strengthens your commercial position as you grow.
Jump to:
Why do you need terms of business?
If you're running a business, terms of business are critical documents to help you maintain control and minimise risks. They should be an essential part of your business strategy that allows you to manage risk and, crucially, limit your liability, especially when you’re a busy supplier servicing many clients. Your terms may also need to cover mandatory compliance issues, particularly where you’re processing personal data as a processor or contracting with consumers; in this case, mandatory rules kick in and must be reflected in your terms. One key role of your terms of business is that they may help you to prevent disputes by laying out key obligations that show your customers what to expect from the outset to avoid misunderstandings.
What should your terms of business cover?
Terms of business will typically be a document with key legal terms, forming the key legal framework for your contractual relationships. Terms of business don’t follow a one-size-fits-all approach and need careful tailoring to ensure they’re fit for purpose and protect your unique business.
Your terms of business should cover several important areas to avoid uncertainty, mitigate risks, and facilitate growth.
Some of the key terms will typically include:
- A clear description of the goods or services you’ll provide.
- Pricing details, including whether you’ll charge expenses.
- Payment terms specify how and when customers pay and what happens in the event of late payment (these are critical to protect a supplier’s cash flow and enforce payment rights).
- If you’re delivering goods, delivery terms include explaining your timeframes for delivery and when the customer becomes responsible for the goods.
- Where you provide services, service performance details, timelines, and service levels.
- Liability limitations, including a cap on liability, are critical for a supplier to control their potential liabilities.
- Confidentiality and intellectual property (IP) protections ensure information is safeguarded and protect the supplier’s IP rights.
- Termination clauses, detailing when and how the contract can be ended, including required notice periods.
- Data protection obligations (such as data processing terms) are necessary to comply with data protection law rules when the contract involves data processing.
- Dispute resolution procedures, setting out a process for speedy resolution.
These are just a handful of important provisions. However, depending on how you operate, your terms may need several additional provisions to reflect your business offering, any specific rules that apply to your business or industry, and to prevent risk.
Do you need to follow legal rules in contracts?
Yes, certain legal rules apply to certain contracts, and in some cases, specific terms are required by law. For example, consumer protection laws require businesses to provide certain information in writing to customers before finalising a contract.
Additionally, if your business handles personal data as a data processor, contracts that include data processing must contain mandatory provisions to comply with the UK GDPR.
There are also rules around limiting liability in contracts, and if your liability limitation terms don’t comply with them, they could be unenforceable and expose your business.
It’s sensible to seek legal advice before rolling out terms of business to ensure they comply with any applicable legal rules your business needs to follow.
Should you work with a lawyer on your terms?
It’s highly recommended that you work with a commercial lawyer when you have no terms of business in place or need to draft or update them.
As well as drafting robust terms of business, a lawyer will get to know your business and guide you on the best way to roll out the terms and implement your contracting process correctly, depending on your business model. This includes ensuring you have a straightforward process of incorporating your terms of business into your contracts so they’re legally binding and you can rely on them. For instance (depending on how you deal with customers) you may seek to append your terms of business to an Order Form or have them published on your website for customers to click to agree to – a lawyer will guide you on this and the correct approach, as correctly incorporating your terms into your contracts is critical.
Terms of business should be an integral part of your business setup from the start, not something you leave to the last minute. A commercial lawyer can help ensure the language you use in your legal documents is transparent, compliant, and enforceable and that your terms of business protect you now and as far as possible.
These documents and their drafting need a nuanced approach depending on the circumstances, too – for example, whether you’re offering your services to consumers or B2B. It’s important to know that consumer contracts are subject to stricter regulations, whereas B2B contracts generally allow for more flexibility, but must still comply with rules. That’s why your terms must be properly tailored to the type of customer you are dealing with, and some of the terms explored above (e.g. around liability) may look different depending on who you’re contracting with.
It is also important to regularly update your commercial contracts to ensure they remain fit for purpose and protect your business over time.
If a customer requests changes to your terms or you're asked to sign someone else’s terms, it’s also advisable to get legal guidance to ensure you’re not taking on significant risks to get the deal over the line.
Investing in legal advice can help give you strong contractual legal protection and peace of mind.
Future-proof your contracts and protect what matters
The strength of your terms of business can make or break your ability to resolve issues, enforce payments, and defend your position when things don’t go to plan. Don’t wait until there’s a problem to discover your contracts aren’t up to scratch.
Our specialist commercial law solicitors will help you draft, review, or improve your terms so they’re fit for purpose, legally sound, and ready to withstand scrutiny, giving you peace of mind and commercial confidence.
