What should my terms and conditions say? (UK small business)

GuideUKChecked 30 October 202612 primary sources8 min readUS version

The short answer

In the UK, your terms should cover what you supply, the price and payment date, deposits, cancellation and limits on liability. Consumer terms must be fair under the Consumer Rights Act 2015 and explain the 14-day right to cancel most off-premises and distance contracts; business terms must pass the Unfair Contract Terms Act 1977 reasonableness test.

Do I need different terms for businesses and consumers?

Usually, yes. The Consumer Rights Act 2015 and the Consumer Contracts Regulations 2013 protect consumers across the UK; for business customers the Unfair Contract Terms Act 1977 and the Late Payment Act apply instead.

  • Both: who you are, what you supply, the total price, when payment is due, deposits, cancellation and variations.
  • Business terms: late payment interest, a liability cap and who owns what you create. In England, Wales and Northern Ireland a service to a business carries an implied duty of reasonable care and skill (Supply of Goods and Services Act 1982 s.13).

What does the Consumer Rights Act require?

Some promises are built into every consumer contract, and an unfair term does not bind the customer.

  • Services: performed with reasonable care and skill (s.49); what you say or write about the service binds you if the customer relies on it (s.50); a reasonable price where none was agreed (s.51) and a reasonable time (s.52).
  • Remedies: repeat performance at your cost within a reasonable time (s.55), then a price reduction up to a full refund (s.56). A term that excludes the s.49 duty does not bind the consumer (s.57).
  • Goods you supply or fit: of satisfactory quality and fit for purpose (ss.9 and 10), and installed correctly (s.15).
  • Fairness: a term that, contrary to good faith, causes a significant imbalance to the consumer's detriment is unfair and not binding (s.62); Schedule 2 lists examples. Liability for death or personal injury caused by negligence cannot be excluded (s.65).

When can a customer cancel?

A consumer who agrees a contract in their home or away from your premises, or by phone, email or online without meeting you, normally has 14 days. A contract agreed at your own premises carries no such right.

  • The period: for services it ends 14 days after the day the contract is made; for goods, 14 days after the day the customer receives them (reg 30).
  • The information: give the pre-contract and cancellation information, with the model form, before the customer is bound (regs 10 and 13). Without it the period runs up to 12 months longer (reg 31), a customer who cancels pays nothing for services supplied (reg 36(6)), and for an off-premises contract you commit an offence (reg 19).
  • Starting early: only at the customer's express request, on paper or email for an off-premises contract. If they then cancel, they pay a proportionate amount (reg 36).
  • Refunds: within 14 days, for services of being told, for goods of getting them back or proof they were sent (reg 34).
  • Exceptions include goods made to the customer's specification, catering for a specific date, a visit the customer asked for to make urgent repairs (reg 28) and off-premises contracts for £42 or less (reg 27).
£3,000 repaint agreed at the customer's home, £600 deposit, cancelled on day 5 (indicative, As of Oct 2026)Refund
No express request, no work started£600
Express request given, 1 of 6 working days done: £3,000 x 1 / 6 = £500 owed£100

See the Academy lesson on a repair visit that became a boiler sale.

What payment terms should I set for business customers?

A due date and what happens if it is missed. Even if your terms say nothing, a business customer who pays late owes statutory interest and compensation, across the UK.

Interest is 8% a year above the Bank of England reference rate: 11.75% where interest starts to run July to December 2026. With no agreed date, it runs from 30 days after the later of doing the work and the customer receiving notice of the debt (s.4). Add £40, £70 or £100 per invoice by size (s.5A). A term that removes the right without a substantial remedy of its own is void (ss.8 and 9). As of Oct 2026.

The Act never applies to a consumer, so set any late payment rate in your consumer terms. See how to chase an unpaid invoice.

Can I limit my liability?

Yes, within limits. You can never exclude liability for death or personal injury caused by negligence, and any other limit must be reasonable in business terms and fair in consumer ones.

  • Business customers: other negligence exclusions, and limits in your standard terms, hold only if reasonable (Unfair Contract Terms Act 1977 ss.2, 3 and 11), judged when the contract was made (s.11(1)). For a money cap the court weighs your resources and whether insurance was available (s.11(4)). Scotland has its own test under ss.17 and 24.
  • In practice: cap at your insurance limit or a multiple of the fee, and list excluded losses precisely: excluding lost profit does not necessarily exclude wasted expenditure (Soteria Insurance v IBM [2022] EWCA Civ 440).
  • Consumers: limits are tested for fairness (s.62) and cannot touch the s.49 duty (s.57).

Can I keep a deposit or charge for cancellation?

What your loss justifies. A deposit sized to your committed costs is safest; a large sum kept whatever happens is the term most likely to fail.

  • Consumers: a deposit kept in full when the customer cancels can be an unfair term if it is out of proportion to your loss (Consumer Rights Act 2015 Part 2). A modest deposit securing a date is usually fair; a large one is a prepayment that only likely loss justifies keeping (CMA37; Workers Trust v Dojap [1993] AC 573).
  • A scale that stands up: likely net loss at each stage (costs spent or committed plus lost profit, not lost revenue), lower the further out, refunding what a rebooking recovers.
  • Business customers: a sum payable on breach is unenforceable as a penalty if it is out of all proportion to your legitimate interest (Cavendish Square Holding BV v Makdessi [2015] UKSC 67).

See the Academy lesson on deposits and no-show fees.

When should a solicitor review my terms?

Before you first use them, and again when the way you sell changes: a new liability cap or indemnity, selling online or in customers' homes, or before you keep a deposit after a cancellation.

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Questions owners ask

What happens if I have no written terms?

The law fills the gaps: for a consumer, a reasonable price and time (Consumer Rights Act 2015 ss.51 and 52); for a business debt, statutory interest from 30 days after the later of the work and notice of the debt. You still owe consumers cancellation information for off-premises and distance contracts.

How long does a customer have to cancel?

For an off-premises or distance contract, 14 days: for services, ending 14 days after the day the contract is made; for goods, 14 days after the day they arrive. Without the cancellation information it can run up to 12 months longer (Consumer Contracts Regulations 2013 regs 30 and 31).

Can I charge a consumer a cancellation fee?

Yes, if it reflects your likely loss. A charge out of proportion to that loss can be an unfair term that does not bind the customer (Consumer Rights Act 2015 s.62 and Sch 2).

Can I exclude liability in my terms?

Never for death or personal injury caused by negligence (Unfair Contract Terms Act 1977 s.2(1); Consumer Rights Act 2015 s.65). Other limits must be reasonable in business terms and fair in consumer terms.

Sources

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