Terms of Business Template for UK Limited Companies

Why every limited company needs written terms

Without written terms, contracts are governed by a patchwork of implied terms under the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, and common law. That patchwork rarely favours the supplier. A clear terms of business document establishes the agreed scope, price mechanism, payment timeline, and liability cap before work begins — not after a dispute has already started.

For companies extending credit to clients, written terms are also the foundation on which any debt recovery action rests. A court will look first at what was agreed in writing; verbal agreements are harder and more expensive to prove.

Core clauses to include

• Definitions: Who the parties are; what constitutes an "Order" or "Services".
• Acceptance: How a contract is formed — purchase order, signed quote, or written confirmation.
• Payment terms: Due date, invoicing frequency, accepted payment methods, and interest on late payment.
• Liability cap: Usually limited to the value of the contract or 12 months' fees — whichever is lower.
• Intellectual property: Who owns deliverables, background IP, and any licence granted to the client.
• Confidentiality: Obligations on both parties to protect commercially sensitive information.
• Termination: Notice periods, grounds for immediate termination, and what happens to work in progress.
• Governing law and jurisdiction: English and Welsh courts are conventional for UK B2B.

Battle of the forms

If your client also has standard terms, whichever set is referred to last before performance begins tends to govern — this is the "last shot" rule under English contract law. To reduce risk, include a clause stating that your terms prevail over any conflicting terms the client may issue, and train your team not to sign client purchase orders without checking for overriding conditions.

Confirm with your solicitor how to structure this clause correctly, particularly if you deal with large corporate clients whose procurement teams routinely impose their own supplier terms.

Incorporating terms into your trading relationship

Terms are only binding if the other party had reasonable notice of them before the contract was formed. Send them with your initial quote, include a link in your email footer, and reference them explicitly in the body of your proposal. Attaching them as a PDF at the point of invoicing is usually too late.