Separate business and consumer terms

Hello there. I am Gemma from Lawyer Destroyer, and I would be happy to help you with this.

The short answer is that while there is no strict law saying you must physically separate your terms into two different documents, it is almost always the best practical approach to do so. This is because the law treats consumers and businesses very differently in England and Wales.

The legal position:

When you sell to consumers, your contracts are strictly regulated by laws like the Consumer Rights Act 2015. Consumers are given automatic rights that you cannot write out of your contract, such as the right to goods being of satisfactory quality and the right to a 14-day cooling-off period if they buy online. The law also insists that consumer terms are written clearly and transparently, and any unfair terms will simply not be legally binding.

When you sell to other businesses, the relationship is much more flexible. Under the Unfair Contract Terms Act 1977, businesses are assumed to be on a more equal footing. You have much greater freedom to limit your liability if something goes wrong, restrict refund rights, and set your own terms for payments or cancellations. Businesses do not get an automatic right to change their mind and cancel.

The practical risks of using the same terms:

If you try to use a single set of terms for everyone, you run a few practical risks.

First, you might accidentally give your business customers generous consumer rights, like the right to a refund for no reason, which could cost you unnecessary time and money.

Second, you might include tough liability exclusions meant to protect you against business claims, which a court would likely strike down as unfair if applied to a consumer.

Third, trying to explain the different rules in one document can make it very long and confusing. This goes against the legal requirement that terms for consumers must be plain, transparent, and easy to understand.

Practical next steps:

1. Look closely at who you are selling to. If you mostly sell to businesses but occasionally to consumers, you still need to respect consumer rights for those individual consumer sales.

2. Create separate documents. Having one document called Consumer Terms and Conditions and another called Business Terms and Conditions is the easiest way to give yourself maximum protection while staying on the right side of consumer law.

3. Set up clear signposting. If you sell through a website, you can ask the user at the checkout to confirm whether they are buying as a business or a consumer, and then present them with the correct terms to accept.

4. If you absolutely must use one combined document, ensure you clearly separate the rules. You will need to start specific clauses with phrases like If you are a business customer or If you are a consumer so it is crystal clear who gets what rights. However, keeping them separate is generally much cleaner.