Why every SMB and SME should have standard terms for customers
For small to medium-sized businesses (SMBs and SMEs), having standard terms and conditions is essential for building a legally sound, transparent foundation for transactions. Whether you’re selling goods or services to consumers (B2C) or other businesses (B2B), having a clear set of terms protects your interests, sets expectations, and streamlines operations. By tailoring these terms to your customers and what you are selling, you can address specific legal requirements, improve customer satisfaction, and reduce the risk of disputes. Clear, standardised terms also help both parties understand the spirit of the relationship, fostering trust and collaboration.
1. Liability and compliance with UCTA
In both B2B and B2C transactions, liability provisions help protect your business from undue risk. For example, limiting your liability to the cost of the product you are selling, the value of services provided in a certain period of time or to the level of relevant insurance you hold. The best liability provisions to use will depend on your business, what you are selling and how you are insured, but these terms must also comply with legislation designed to protect Business A, the purchaser, from Business B, the seller, removing absolutely all their risk meaning if Business B does not comply with the relevant contract or causes them harm Business A can’t claim any losses. One key piece of legislation is Unfair Contract Terms Act 1977 (UCTA). UCTA imposes limits on how liability can be restricted, particularly in B2C contexts, and determines when certain exclusions or limitations may be deemed unfair or unenforceable.
B2B: In business-to-business contracts, UCTA allows for more flexibility but still places limits on certain exclusions, such as liability for negligence resulting in personal injury or death, which cannot be excluded. When drafting liability clauses, it’s crucial to ensure they’re reasonable under UCTA, especially when seeking to limit liability for financial losses or damages. Including balanced and fair liability limits helps protect your business while maintaining compliance.
B2C: UCTA is even more restrictive in consumer contracts, reflecting the additional protections consumers receive under UK law. For instance, liability for defective products that cause injury or property damage cannot be excluded or limited. To comply, liability provisions in B2C terms should avoid unfair exclusions and align with the Consumer Rights Act 2015 and other key consumer legislation, ensuring that consumers are protected while allowing your business to manage reasonable risks.
2. Description of goods or services
Accurate descriptions of goods or services help manage expectations and avoid misunderstandings, ensuring both parties understand what’s being delivered.
B2B: For business clients, it’s crucial to specify product or service details, quality standards, and scope of services. A clear description can help prevent disagreements over what’s included in the purchase and establish clear standards for deliverables.
B2C: Under consumer law, goods must match their descriptions, be of good quality and be “fit for purpose.” Ensuring product descriptions are accurate and clear, and for services, clarify what customers can expect, helps you comply with consumer legislation. Vague descriptions and terms may lead to consumer complaints or legal action, so precision is key.
3. Delivery times and terms
Clear delivery times and delivery terms establish trust and set a framework if delays or issues arise.
B2B: In business contracts, it’s common to specify delivery dates, or to purposefully avoid doing this, and set out any charges for delays. If delivery depends on the customer fulfilling certain conditions (for example, providing access or confirming details), this should be included. For physical goods, you should specifiy delivery methods and who bears the risk during transit and what happens if a delivery date cannot be met.
B2C: Consumer law requires businesses to deliver goods within 30 days unless otherwise agreed. Be transparent about delivery times and what consumers can expect. Including information on tracking, where consumers can find live delivery information, and handling delays helps manage expectations and improves customer satisfaction.
4. Payment terms and cancellation costs
Establishing payment terms and clear cancellation costs is vital to protect your cash flow and cover potential losses from cancelled orders.
B2B: Payment terms in B2B transactions often include invoicing schedules, payment deadlines, interest to be paid by the person receiving the goods or services on overdue payments and rights to claim costs associated with chasing debt if amounts remain overdue. Specifying payment methods and any conditions that may affect payment timelines is important in standard terms. For cancellations, outlining any fees or notice periods customers need to adhere to in order to cancel services and any liquidated damages due on cancellation are important to avoid revenue loss due to last-minute changes.
B2C: Consumer law gives customers rights to cancel certain transactions within a “cooling-off” period depending on what and how they purchase goods/services. If you offer goods, you need to explain what happens if they are sent back in this period. If you offer services, you need to clarify if the “cooling-off” period will end early if services are provided before the cooling-off period ends and if fees will apply for cancellations made close to the service date.Again, this is important for cash flow and resourcing.
5. Compliance with consumer legislation
Businesses selling to consumers must adhere to consumer protection laws, ensuring fair treatment and transparent communication.
B2B: B2B transactions generally allow for more flexibility in terms, as both parties are presumed to have a similar level of bargaining power. While adhering to fair practices is essential, the terms can be negotiated to include more tailored risk-sharing.
B2C: For B2C transactions, terms must comply with consumer protection laws such as the Consumer Rights Act 2015, and these terms are implied into contracts at any rate. The legislation provides that goods must be of satisfactory quality and services must be provided with reasonable care and skill. Ensuring compliance, and setting out goods and services descriptions clearly helps build consumer trust and reduces the risk of legal issues.
6. Returns, refunds, and warranties
Having a defined returns, refunds, and warranties policy helps streamline issues and manage customer expectations.
B2B: Many businesses do not offer refunds once goods are accepted unless specified. However, it’s wise to include terms about returns and warranties to handle quality concerns or defects. Specify the process and time limits for requesting refunds or repairs and clarify any warranty conditions.
B2C: Consumers generally have more robust rights to return goods, especially if they are faulty. Include a clear policy covering refunds, exchanges, and warranties to comply with consumer law and avoid disputes.
7. Supplier and customer responsibilities
Outlining each party’s responsibilities provides clarity and protects your business from issues arising from the customer’s actions or inactions.
B2B: For B2B contracts, specify the customer’s responsibilities, especially if their actions can impact your delivery, such as providing access or timely responses. Clarifying responsibilities upfront helps reduce delays and misunderstandings.
B2C: With consumer sales, keep terms simple and clear. Specify any requirements customers must meet, such as handling instructions for goods or following usage guidelines. This protects your business if a customer misuses the product or fails to follow directions.
How Adaptable Legal Counsel can help you create effective standard terms
Having well-crafted standard terms doesn’t just help avoid disputes, it establishes a mutual understanding of expectations and responsibilities, aligning both parties with the spirit of the relationship and providing clarity on both parties obligations. At Adaptable Legal Counsel, we offer flexible legal services that can support your business in creating standard terms that meet the needs of both consumer and business customers.
Here’s how our flexible legal services can support you:
customized terms for your business: We can work with you to create terms that reflect your industry, customer base, and the specific risks you face in B2B and B2C transactions.
Legal compliance and practical protection: Our experience with consumer and commercial law helps us help you ensure that your terms are legally compliant, transparent, and capable of protecting your business, including alignment with UCTA and other relevant regulations.
Risk management and dispute avoidance: We help you identify and address potential risks, minimising the chance of disputes and protecting your business interests.
Standard terms are more than just paperwork. They are a powerful tool for protecting your business, enhancing customer relationships, and setting a foundation of trust. Contact us at Adaptable Legal Counsel to discuss how our flexible legal services can support you in creating robust, effective terms that cover every aspect of your customer relationships.
At Adaptable Legal Counsel, we’re a disruptor consultancy offering flexible, cost-effective legal services for SMBs and SMEs. With years of in-house experience, we understand the unique challenges SMBs and SEMs face with customer contracts. For November and December, we’re offering solicitor-drafted, bespoke Terms and Conditions starting from £350 (Quotes vary based on business type, risk, and requirements.)
I’m a commercial solicitor qualified in England and Wales with a strong background in commercial law, offering flexible, cost-effective legal services for small to medium-sized businesses. With years of in-house experience, I specialise in creating practical, bespoke legal solutions that protect and empower growing businesses.
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