Business to Business Contracts - A Short Guide

Business to Business (B2B) contracts refer to agreements between two commercial entities. These contracts are foundational to commercial transactions and business relationships. They cover a wide range of interactions, including the sale of goods or services, supply agreements, distribution agreements, and partnership agreements, among others. B2B contracts are governed by a mixture of statutory law and common law principles in the UK.

In England and Wales, there is significant freedom to contract, meaning businesses can negotiate terms that suit their needs and preferences. However, some statutory regulations, such as those related to unfair contract terms, still apply.

What should be included in business to business contracts?

In Business to Business (B2B) contracts, certain elements are essential to ensure clarity, enforceability, and protection for both parties involved. While the specific contents can vary depending on the nature of the business, the industry, and the transaction, here are key components that should generally be included in B2B contracts:

Parties’ information

• Full legal names of the businesses involved.
• Contact information and registered addresses.
• The legal status of each party (e.g., corporation, partnership).

Description of goods or services

• A detailed description of the goods or services to be provided, including specifications, quality standards, and any relevant industry standards.

Pricing and payment terms

• Prices, including any taxes or additional charges.
• Payment terms, such as payment methods, invoicing schedule, and due dates.
• Penalties for late payments or provisions for early payment discounts.

Delivery terms

• Delivery schedules, locations, and methods.
• Responsibilities for shipping costs and insurance.
• Terms related to the transfer of risk and title.

Term and termination

• Effective date and duration of the contract.
• Conditions under which the contract can be terminated early by either party.
• Consequences of termination, including any rights to terminate for cause or convenience and any termination fees.

Warranties and guarantees

• Express warranties regarding the goods or services.
• Any disclaimers or limitations on warranties.

Limitation of liability

• Clauses limiting liability of either party for breaches of the contract, including caps on damages.
• Clauses excluding liability for certain types of losses, such as loss of profits or indirect damages.

Confidentiality clauses

• Obligations to protect confidential information exchanged during the course of business.
• Definitions of what constitutes confidential information and any exclusions.

Intellectual Property (IP) Rights

• Ownership of IP rights in any works created as part of the contract.
• Licenses granted to use IP necessary for the execution of the contract.

Dispute resolution

• Preferred methods for resolving disputes, such as arbitration or mediation.
• Jurisdiction and applicable law in case of legal disputes.

Force Majeure

• Provisions that release both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.

Miscellaneous provisions

• Non-assignment clauses restricting the transfer of the contract to others without consent.
• Entire agreement clauses stating that the written contract represents the full agreement between the parties.
• Amendment clauses outlining how the contract can be modified.

Signatures

• The signatures of authorised representatives of each party, including the date of signing.

What are implied terms?

An implied term in a contract refers to a provision that is not expressly stated in the terms and conditions, but is nonetheless considered a part of the contract by the law, custom and practice, or the courts. Implied terms are used to fill gaps in contracts to reflect the parties’ intentions, ensure fairness, or meet the minimum legal standards.

What are unfair contract terms?

The Unfair Contract Terms Act 1977 & Consumer Rights Act 2015 are crucial for B2B contracts, even though the Consumer Rights Act is more focused on B2C (Business to Consumer) transactions. The Unfair Contract Terms Act restricts the ability to exclude or limit liability for breach of contract and imposes requirements for fairness and reasonableness in contract terms.

Enforceability and compliance

Ensuring that B2B contracts comply with UK law is vital to ensure they are legally binding. Businesses often seek legal advice to navigate complex regulatory environments and to tailor contracts that reflect their commercial objectives while minimising legal risks.

How can Expert Commercial Law assist?

Having a well drafted contract helps to build trust in business relationships. Expert Commercial Law have a panel of solicitors who can assist in the formation of your B2B contracts. Our panel firms can also assist in resolving business contract disputes.

It’s worth noting that a solicitor with expertise in contract law can provide guidance throughout the process, and can help protect the client’s rights and interests. They can also help evaluate the strength of the case and advise on the best course of legal action. If you need help with a business to business contract, speak to us today. Unfortunately, we are unable to assist with employment law contracts.

We can also assist with business to consumer (B2C) contracts.

Our solicitors also help with other commercial claims, such as breach of contract and CCJ removal.

Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.