TRW & Co · Commercial contracts
Business Terms and Conditions: What B2B Terms Should Cover
Good terms and conditions for business customers fix price, payment, delivery, warranties, liability and intellectual property for every order. But under English law they only protect you if they are properly incorporated, and if your terms, not the customer's, win the battle of the forms. This guide explains what UK B2B suppliers should include and how to make the terms stick.
Key pointThe most common failure in B2B standard terms is not bad drafting but bad process: terms that were never put before the customer before the contract was formed, or that were displaced by the customer's purchase order terms because they sent the last document before delivery.
At a glance
Incorporation first
Terms bind only if signed, or brought to the customer's attention before the contract is made; terms on invoices sent after delivery usually come too late.
Last shot rule
Where both sides send their own terms, English courts generally apply the terms in the last document sent before the other side performs.
UCTA reasonableness
Exclusions and caps in one party's written standard terms of business must be fair and reasonable, and the supplier must prove it.
Statutory late interest
Without an agreed substantial remedy, late B2B payments carry statutory interest at 8% above Bank of England base rate plus fixed compensation.
Payment reform pending
As of October 2026 the Commercial Payments Bill, proposing payment term caps and mandatory interest, is before Parliament and not yet law.
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The short answer: what B2B terms should cover
Well-drafted terms and conditions for business customers set out, in one standard document, how you price, deliver, invoice and limit your risk on every order. For a UK supplier selling to other businesses, they should cover at least: how the terms become part of each contract, the scope of the goods or services, price and payment, delivery and acceptance, warranties, limitation of liability, intellectual property, confidentiality, termination, and governing law and jurisdiction.
The legal value of standard terms depends less on their content than on two practical questions. First, were they actually incorporated into the contract? Second, if the customer sent its own terms, whose terms won? A carefully drafted set of terms that never became part of the contract is worth nothing.
This guide covers business-to-business (B2B) contracts under the law of England and Wales. Selling to consumers is a different exercise, governed by the Consumer Rights Act 2015 and other consumer protection rules.
The legal framework for standard B2B terms
There is no single statute governing terms and conditions for business contracts in England and Wales. The rules come from several sources.
- Common law contract rules on offer, acceptance, incorporation and interpretation, which decide whether your terms apply and what they mean.
- The Sale of Goods Act 1979, which implies terms about title, description, satisfactory quality and fitness for purpose into contracts for goods.
- The Supply of Goods and Services Act 1982, which implies a term that services will be carried out with reasonable care and skill, and in a reasonable time where none is fixed.
- The Unfair Contract Terms Act 1977 (UCTA), which bans some exclusions outright and subjects others, including exclusions in one party's written standard terms of business, to a reasonableness test.
- The Late Payment of Commercial Debts (Interest) Act 1998, which gives a statutory right to interest and fixed compensation on late B2B payments unless the contract provides a substantial remedy instead.
- The Business Contract Terms (Assignment of Receivables) Regulations 2018, which make terms preventing the assignment of receivables ineffective in many contracts with smaller suppliers entered into on or after 31 December 2018, subject to exceptions.
Reform is also under way. As of October 2026, the Commercial Payments Bill is before Parliament. It proposes caps on payment terms, mandatory late payment interest that cannot be contracted out of, and stronger powers for the Small Business Commissioner. It is not yet law, and any changes will depend on the final text and commencement regulations.
Incorporation: making sure your terms apply
Even the best terms and conditions for business sales only bind a customer if they are incorporated into the contract before or when it is made. There are three main routes.
Signature
A customer who signs a document containing or expressly referring to the terms is generally bound by them, whether or not it read them. This is the most reliable method, which is why many suppliers use a signed order form or framework agreement.
Reasonable notice
Without a signature, the supplier must take reasonable steps to bring the terms to the customer's attention before the contract is made. Terms printed on the back of an invoice sent after delivery come too late. The more onerous or unusual a term, the more prominently it must be highlighted. In Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd, the Court of Appeal refused to enforce a heavy holding charge buried in standard conditions because it had not been fairly brought to the customer's attention.
Course of dealing
Terms may be incorporated by a consistent course of dealing between the parties over many transactions. This is less certain and should be a fallback, not a strategy.
Online, a click-to-accept process that requires the customer to tick a box confirming acceptance of linked terms, with a record kept of the version accepted, is far stronger than a link in a website footer. Our guide to electronic signatures in the UK explains how electronic acceptance is treated.
Put a clear statement on your quotation and order acknowledgement that the contract is subject to your terms to the exclusion of all others, attach or link the current version, and keep version-controlled copies. When a dispute arises, you will need to prove which terms applied on the date of the order.
The battle of the forms
When both sides exchange documents that each refer to their own standard terms, English law applies a traditional offer-and-acceptance analysis. A response that refers to different terms is usually a counter-offer, not an acceptance. The contract is generally formed on the terms in the last document sent before the other side performs, for example by delivering goods or accepting delivery. This is often called the "last shot" approach.
The Court of Appeal applied this traditional analysis in Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd and confirmed it in Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209, while recognising that the parties' conduct can show a different common intention. In practice, outcomes are fact-sensitive and can surprise both sides.
Practical defences for suppliers relying on standard terms and conditions for business orders include: requiring customers to sign your terms or a framework agreement; including a clear statement that your terms prevail; issuing an order acknowledgement referring to your terms before delivery; and training sales teams not to sign customer purchase order terms without review. Where a key customer insists on its own terms, negotiate a single agreed document rather than relying on the battle of the forms.
Key clauses in terms and conditions for business supplies
| Clause | What it should do | Watch out for |
|---|---|---|
| Basis of contract | State that your terms apply to every order and exclude the customer's terms | Order process must actually put terms before the customer |
| Specification and scope | Define the goods or services by reference to a quotation or specification | Inconsistent sales literature or emails |
| Price and payment | Set prices, VAT, invoicing triggers, payment period, interest and suspension rights | Proposed statutory caps on payment terms |
| Delivery and risk | Fix delivery terms, when risk and title pass, and retention of title | Delivery dates should be estimates unless agreed otherwise |
| Warranties | Give a defined warranty and remedy (repair, replace, refund) and exclude implied terms where reasonable | Title-related implied terms cannot be excluded |
| Limitation of liability | Cap liability and exclude specified heads of loss | UCTA reasonableness for standard terms |
| Intellectual property | Keep IP in your materials and grant only the licence needed | Bespoke work where the customer expects ownership |
| Termination | Allow termination for breach, insolvency and non-payment | Insolvency-related termination restrictions on suppliers |
| Law and jurisdiction | Choose English law and the courts of England or arbitration | Enforcement against overseas customers |
Price and payment
Specify when you can invoice, the payment period and the consequences of late payment. Under the 1998 Act, if no rate is agreed, statutory interest on late B2B payments runs at 8% above the Bank of England base rate, and a supplier can also claim fixed compensation that rises with the size of the debt. A contractual rate replaces the statutory one only if it is a substantial remedy. Our guide to late payment interest explains how to calculate and claim it, and our debt recovery team can act where invoices go unpaid.
Delivery, risk and retention of title
For goods, say when risk passes (often on delivery) and when ownership passes (often only on full payment). A retention of title clause lets a supplier recover unpaid goods still identifiable in the customer's possession if it becomes insolvent. Simple retention clauses are generally effective; more ambitious versions claiming proceeds of sale or mixed goods are much harder to enforce.
Warranties and implied terms
The implied terms about satisfactory quality and fitness for purpose can be excluded or modified in B2B contracts, but only if the exclusion is reasonable. A common approach is to replace them with an express warranty for a defined period with a clear remedy, such as repair or replacement.
Limitation of liability
Liability for death or personal injury caused by negligence and for fraud cannot be excluded. Other caps and exclusions in standard terms must satisfy the UCTA reasonableness test. See our detailed guide to the limitation of liability clause.
Other clauses
Include a force majeure clause, confidentiality, data protection where personal data is processed, a non-assignment clause (subject to the receivables rules), a dispute resolution clause and an entire agreement clause.
How to put robust B2B terms in place
- Map your sales process. Identify every route by which orders arrive: quotes, online orders, purchase orders, framework agreements and repeat orders.
- Draft or update the terms. Tailor them to what you actually sell. Generic terms and conditions for business templates often miss sector-specific risks such as installation, software or regulated products.
- Test the reasonableness of exclusions. Check caps and exclusions against your insurance, prices and customer base, and keep a record of why they are reasonable.
- Fix the incorporation mechanics. Update quotations, order forms, acknowledgements and the website checkout so terms are presented before contract formation.
- Train the sales team. Explain the battle of the forms and set rules on when customer terms may be accepted, and who can approve changes.
- Version control and review. Date each version, archive old ones and review annually, or sooner when law changes, such as late payment reform.
An illustrative scenario
This scenario is illustrative only; the parties are generic and the facts invented.
A UK component manufacturer sends a quotation referring to its own terms, which cap liability at the order value. The customer responds with a purchase order stating that its own terms apply, with unlimited liability. The manufacturer's warehouse ships the components without sending an order acknowledgement.
A defect later causes a production line stoppage and the customer claims substantial losses. On a traditional analysis, the customer's purchase order may be the last shot, accepted by the manufacturer's conduct in delivering. If so, the liability cap would not apply. Had the manufacturer issued an acknowledgement referring to its terms before shipping, and had the customer then accepted delivery, the result might have been different.
The point is not that the last document always wins, but that the outcome depends on a sequence of documents that sales and logistics teams control. Process discipline is as important as the drafting of the terms and conditions for business customers themselves.
Risks and common mistakes
Copying another company's terms
Terms and conditions for business sales copied from a competitor or the internet rarely fit your products, processes or risks, and may contain clauses that are unenforceable or inconsistent. They can also infringe copyright. More importantly, they will not reflect your actual insurance, pricing model or delivery practices, which matter when a court assesses whether a limitation clause is reasonable. A tailored set of terms is not long, but it is specific.
Terms that are never shown before the contract
Terms printed on invoices, delivery notes or a website page the customer never visits are often not incorporated. The safest approach is a signed document or a click-to-accept process. If you rely on reasonable notice, refer to the terms clearly on the quotation and order acknowledgement, and draw particular attention to any onerous clauses, such as unusual charges or wide exclusions.
Unreasonable exclusion clauses
Suppliers sometimes exclude all liability or cap it at a nominal sum. In standard terms, such clauses must meet the UCTA reasonableness test, and the supplier bears the burden of proving it. Courts consider bargaining power, whether the customer could have bought elsewhere without the term, and whether insurance was available. An over-aggressive clause may fail entirely, leaving liability unlimited, while a sensible, insured cap is much more likely to survive.
Ignoring payment law reform
As of October 2026, the Commercial Payments Bill proposes caps on payment periods and would make statutory late payment interest mandatory, with commencement still to be confirmed. Businesses with long payment terms, or clauses waiving interest, should track the Bill and plan updates. Suppliers should check whether their own customers' purchasing terms will need to change, which may improve cash flow.
Selling abroad on English terms
English law is a popular choice for international B2B contracts, but choosing it does not guarantee that your terms will be enforced overseas. Consider where the customer's assets are, whether an English judgment will be recognised there, and whether arbitration would be easier to enforce. For customers in Bangladesh, the Gulf or South Asia, a London-seated arbitration clause is often the more practical choice; see our guide to English law contracts with Bangladeshi counterparties.
UCTA's controls do not apply to certain international supply contracts, and mandatory local rules may apply in the customer's country regardless of the choice of English law. Incoterms should be referenced correctly where goods cross borders, and they should match the risk and delivery provisions in your terms.
Checklist: are your terms and conditions for business fit for purpose?
- Are your terms put before customers, and accepted, before each contract is formed?
- Do your quotations and order acknowledgements state that your terms apply and exclude others?
- Are payment terms, interest and suspension rights clear, and ready for late payment reform?
- Do you have retention of title for goods and clear risk provisions?
- Are warranties and exclusions of implied terms reasonable and matched to your insurance?
- Is liability capped and are the excluded types of loss expressly listed?
- Is IP ownership clear, especially for bespoke work?
- Do governing law and dispute resolution clauses suit where your customers are based?
Our commercial contracts solicitors draft and review standard terms and conditions for business suppliers across sectors. Contact our London office at info@trw.co to discuss your terms.
Frequently asked questions
01Are terms and conditions legally required for a UK business?
There is no general legal requirement for a business selling to other businesses to have written standard terms. Without them, however, the contract will be governed by whatever was agreed in correspondence plus the terms implied by statute and common law, such as implied terms on quality and reasonable care. That usually means unlimited liability, no retention of title and no clear payment rights. Written terms are the simplest way to manage those risks consistently across every order.
02How do I make sure my terms and conditions apply?
Get the customer's signature on an order form or framework agreement that incorporates the terms, or use an online click-to-accept process. Otherwise, refer to the terms clearly in the quotation and order acknowledgement and make a copy available before the contract is made. Highlight any onerous or unusual terms. Keep records showing which version applied to each order, and issue an acknowledgement referring to your terms before delivery to reduce battle of the forms risk.
03What is the battle of the forms?
It is the situation where buyer and seller each send documents referring to their own standard terms. English courts usually analyse the exchange as offer and counter-offer, so the contract is formed on the terms in the last document sent before the other party performs, for example by delivering or accepting goods. The Court of Appeal confirmed this traditional approach in Tekdata v Amphenol, while leaving room for a different result where the parties' conduct shows a different intention.
04Can I exclude all liability in my B2B terms?
No. Liability for death or personal injury caused by negligence and for your own fraud cannot be excluded. Other exclusions and caps in your written standard terms must satisfy the reasonableness test in the Unfair Contract Terms Act 1977, and you must prove they are reasonable. A total exclusion of liability is unlikely to pass. A cap linked to the contract value or your insurance cover, with clear exclusions of specified types of loss, is much more likely to be upheld.
05Can I charge interest on late payments from business customers?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can claim statutory interest at 8% above the Bank of England base rate, plus fixed compensation for recovery costs, unless your contract provides a substantial alternative remedy. Many suppliers set their own contractual rate. Proposed reforms in the Commercial Payments Bill would make statutory interest mandatory and cap payment periods, but as of October 2026 the Bill has not become law.
06Do the same rules apply to selling to consumers?
No. Consumer contracts are governed by the Consumer Rights Act 2015, which gives consumers statutory rights that cannot be excluded and applies a fairness test to terms. Online and distance sales to consumers also carry information and cancellation requirements, and the Digital Markets, Competition and Consumers Act 2024 contains a separate regime for consumer subscription contracts. Businesses selling to both businesses and consumers should have separate sets of terms rather than one combined document.
Sources and official materials
- Unfair Contract Terms Act 1977 — Controls on exclusion clauses and the reasonableness test
- Sale of Goods Act 1979 — Implied terms in contracts for the sale of goods
- Late Payment of Commercial Debts (Interest) Act 1998 — Statutory interest and compensation on late B2B payments
- GOV.UK: Late commercial payments — Government guidance on statutory interest and recovery costs
- Commercial Payments Bill [HL] — Parliamentary progress of proposed late payment reforms
- Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209 — Court of Appeal on the battle of the forms
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.