Do Any Legal Rules Apply to My Business Contracts?

When your business enters into a business-to-business (B2B) services agreement, you must remember that there are specific legal rules you must follow for your contracts. While companies have a degree of flexibility when negotiating commercial agreements, specific legal frameworks must still be followed. This article explores critical rules that apply to B2B contracts and why your business needs to understand and comply with them when trading.

Why is It Important to Follow Legal Rules?

Complying with legal frameworks when drafting your B2B contracts ensures your terms are legally binding and enforceable. Although you have flexibility in drafting, specific contract terms, such as those unenforceable under the law, cannot be included.

For instance, the Unfair Contract Terms Act 1977 (UCTA) prohibits your business from excluding liability for death or personal injury caused by negligence. Other limitation clauses must pass a reasonableness test. Failure to comply with these legal frameworks may result in unenforceable contract terms, exposing your business to legal risks such as disputes and claims.

Working with a commercial contracts lawyer can help ensure your contracts comply with these regulations and adequately protect your business.

What are Some of the Rules Governing Your B2B Contracts?

Various legal rules can impact your B2B contracts and should be considered during drafting. Some of the most relevant rules include:

Supply of Goods and Services Act 1982 

The Supply of Goods and Services Act 1982 (SGSA) implies key terms in B2B services agreements unless they are expressly amended or excluded. These terms ensure a baseline of service quality and fairness. The implied terms include:

• Reasonable Care and Skill: Your business must provide services with reasonable care and skill.
• Completion Within a Reasonable Time: If no timeframe is specified, then the SGSA implies that services must be completed within a reasonable time based on the circumstances.
• Reasonable Price: If no price is agreed upon, the SGSA implies a reasonable price must be paid.

If your business seeks to vary or exclude these terms, you must ensure this is covered correctly and clearly in your contracts. 

Unfair Contract Terms Act 1977

UCTA controls how businesses can limit liability in B2B contracts. While B2B contracts offer more flexibility than consumer contracts, UCTA ensures that limitation or exclusion clauses are fair. 

Key provisions include:

• Liability for Death or Personal Injury: UCTA prohibits businesses from excluding liability for death or personal injury caused by negligence. Any such clause is automatically void.
• Reasonableness Test: Other exclusion or limitation clauses, such as financial loss or property damage, must pass a reasonableness test. 

Exclusion clauses must be clearly drafted and reasonable to ensure enforceability. If they fail to meet UCTA’s standards, they can be deemed unenforceable, leaving your business vulnerable to claims.

UK General Data Protection Regulation (UK GDPR)

If your B2B agreement involves handling personal data, compliance with the UK GDPR is essential. The GDPR imposes strict obligations to ensure that personal data is processed securely and in accordance with data protection laws. 

Key requirements include ensuring that your agreements include mandatory data processing terms prescribed by the UK GDPR. Failure to comply with the UK GDPR can result in substantial penalties. So, it is crucial to include UK GDPR-compliant clauses in contracts involving data processing.

Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

TUPE applies to service provision changes, such as outsourcing or a change in service providers. TUPE also applies to business transfers and mergers. Under TUPE, employees involved in providing the service may automatically transfer to the new provider under their existing terms of employment.

In addition to the above, other legal rules may also affect your wider contracts, including competition law rules and e-commerce law rules that apply where contracts are formed online. 

How Can a Commercial Contracts Lawyer Help Your Business?

A commercial contracts lawyer can play an invaluable role in ensuring that your B2B agreements are legally sound and meet your business needs. They can draft bespoke contracts that address your specific services and risks while ensuring compliance with relevant legal rules and requirements. 

As a key example, a lawyer can review or draft your limitation of liability clauses to ensure they meet UCTA’s reasonableness test, protecting your business from unenforceable terms which could be extremely damaging for your business. 

Your lawyer can inform you of any legal requirements you were unaware of, helping to ensure nothing is missed. Seeking legal advice can also help ensure that your contracts are watertight. It can also ensure your contracts are enforceable and provide you with peace of mind when trading. 

Commercial Contracts Checklist

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Key Takeaways

When drafting B2B services agreements, your business must ensure compliance with key legal frameworks and rules. This to help make sure that your contracts are fair, enforceable, and legally compliant. Working with a commercial contracts lawyer can help give you confidence that your contracts meet all legal requirements and protect your business from potential liabilities.

If your business needs help with legally compliant 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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