Do I Need Different Sets of Legal Terms for Consumers and Business Customers?

If you run an online business that sells products or services to consumers and other companies, you might wonder whether you need separate agreements for each customer type. The types of contracts you will need are essential considerations, particularly for small businesses keen to ensure they have the correct contractual terms for all their customers. This article will explore whether your business needs different sets of terms and conditions for business and consumer customers. 

What are the Differences Between Consumer and B2B Contracts?

When trading with both consumer and business customers, there are essential distinctions that your business should be aware of. In short, you will be subject to stricter requirements when dealing with consumers. 

Consumer protection laws, such as the Consumer Rights Act 2015, apply to online sales and afford consumers specific rights and remedies. 

The critical point you should be aware of is that specific terms that might be standard in business-to-business (B2B) contracts could be considered unfair or unenforceable in consumer contracts due to the range of protections that consumers have under the law.

B2B contracts, on the other hand, are subject to fewer restrictions. In B2B transactions, the law assumes businesses have equal bargaining power and can negotiate terms effectively (although B2B terms and conditions are still subject to certain restrictions, such as rules around unfair terms). This allows for more flexibility, including limiting or excluding certain liabilities if it is reasonable to do so in the B2B context. In summary, your terms with business customers can be more onerous than those with consumers. 

Should You Have Separate Terms for Businesses and Consumers?

As a business owner, you have the choice regarding how to structure your terms and conditions, and you can choose between different approaches. 

As an online business with both consumers and business customers, you have various options for drafting your terms and conditions, for instance: 

• you could choose to be generous and apply comprehensive consumer protections to all customers by using a single set of terms that comply with consumer law. This will help you simplify the process with one standard document, which gives your business customers the same level of protection. However, this limits your ability to include more favourable provisions for business transactions, such as limiting liability or setting specific delivery terms; or

• you can also seek to create separate terms for consumers and businesses. This approach will allow you to tailor each set of terms to meet the legal requirements of each customer type, providing necessary consumer protections while incorporating more flexible and protective terms for business clients. This approach can be beneficial if a significant portion of your customer base consists of businesses, as it allows you to address their specific needs and expectations. If you choose to have separate terms, you can include them in one document or create two different documents. If you are using one combined document, you should clearly specify which sections apply to consumers and which to businesses – this can be complicated. It is essential to get this right. However, offering separate documents may be more straightforward, especially for online businesses.

What Should Your Business Consider When Combining Consumer and Business Terms? 

Combining terms for consumers and businesses in a single document is possible, but this approach has certain complexities and challenges. For instance, identifying which specific terms apply to which of your customers. As such, you should be careful when taking this approach and ensure the drafting in your terms is accurate and easily set out. Including legal terms for both groups of customers can make the document longer and more complex. If the terms become too complicated, especially for consumers, they risk being considered unenforceable, as consumer terms must be clear and transparent. 

Using plain language and providing straightforward instructions can make the document more consumer-friendly, but this may not meet the expectations of business customers who prefer more formal agreements. A combined document may work if most of your customers are consumers and you want to streamline the process. However, if you work with many business customers, this method might not provide the flexibility or protection you need when dealing with business customers. 

What Should You Consider When Using Separate Terms for Business and Consumer Customers?

Drafting separate terms and conditions for consumers and business customers can allow you to include provisions that may not be enforceable in consumer contracts, giving your business additional protection in business-to-business transactions. You can also create more professional and sophisticated contractual terms for business customers. 

Offering two separate documents is possible when you are trading in an online setting. For instance, you could provide separate links, allowing customers to select the terms that apply to them. This method can be beneficial if a significant portion of your customers are businesses. Your business using clear, distinct terms can ensure that each customer receives the appropriate information and agrees to terms that suit them. 

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How Can Taking Legal Advice on Which Terms to Prepare Help Your Business?

Working out which types of terms to offer different customers can be tricky and an important decision. Before developing your terms and conditions for different customers, you may find it helpful to seek legal advice to ensure they are suitable for your customer base and comply with relevant laws. 

A commercial contracts solicitor can help you determine whether separate terms for consumers and business customers are necessary or if a combined approach would work for your business. This is particularly important from a consumer law perspective, where specific terms can be deemed to be unenforceable.

Key Takeaways

Considering the best approach for drafting and implementing different terms and conditions for businesses and consumers can be complicated. Consumer contracts must comply with stricter regulations, such as those in the Consumer Rights Act 2015, which require precise, fair, and transparent terms. In contrast, B2B contracts offer more flexibility and can include clauses that might not be enforceable in consumer contracts. 

Your business can combine terms for consumers and businesses in one document or offer separate documents. The appropriate choice depends on your business needs, customer base and the level of flexibility you need. Working with a commercial contracts solicitor can help your business decide on the best approach for your business and its customers.  

If your business needs help with drafting its contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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