Terms and Conditions for Small Businesses — A Practical Guide

Terms and conditions — often called T&Cs — are one of those things that many small business owners know they probably should have but keep putting off. Writing them feels legalistic, complicated, and frankly a bit dull. But well-drafted terms and conditions are one of the simplest ways to protect your business, set clear expectations with customers, and avoid disputes.

Whether you sell products online, provide services in person, or run a subscription-based business, this guide will walk you through what terms and conditions are, why they matter, and what to include in yours.

What Are Terms and Conditions?

Terms and conditions are a set of rules and guidelines that govern the relationship between your business and your customers. They set out what customers can expect from you, what you expect from them, and what happens when things don't go to plan.

Depending on your business, terms and conditions might also be called:

• Terms of service
• Terms of use (for websites or apps)
• Terms of business
• General conditions of sale

They're distinct from a privacy policy (which deals specifically with data protection) and from a client contract (which is a specific agreement for a particular piece of work), though there can be overlap between all three.

Are They Legally Required?

Strictly speaking, there's no law that says you must have terms and conditions. You can legally run a business without them. However:

• If you sell online, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require you to provide certain information to consumers before they buy, and T&Cs are the most practical way to do this.
• The Consumer Rights Act 2015 gives consumers certain rights regardless of your T&Cs, and your terms must not contradict these statutory rights.
• Having clear T&Cs significantly reduces the risk of disputes and makes it much easier to resolve them when they arise.

In practice, not having terms and conditions leaves you exposed. If a customer disputes a charge, demands a refund, or claims you've failed to deliver what was promised, your T&Cs are your first line of defence.

What to Include

The contents of your terms and conditions will depend on your business model. A freelance web designer will need different terms from an online shop selling candles. But there are several core sections that apply to most small businesses.

1. Business Information

Start with the basics. Identify your business: your trading name, your legal status (sole trader, limited company, partnership), your registered address, and your contact details. If you're a limited company, include your company registration number. This is required by the Companies Act 2006 for limited companies and by consumer protection regulations for anyone selling to consumers.

2. Description of Goods or Services

Be clear about what you're offering. For products, describe them accurately — the Consumer Rights Act 2015 states that goods must match their description. For services, outline what's included and, just as importantly, what isn't.

Vagueness here is where disputes breed. "Website design package" could mean almost anything. "Design and development of a five-page responsive website, including one round of revisions, delivered within four weeks of receiving approved content" is much clearer.

3. Pricing and Payment

Set out your prices, including whether they include or exclude VAT (if you're VAT-registered). Explain your payment terms:

• When payment is due (upfront, on delivery, within 30 days, etc.)
• Accepted payment methods
• What happens if payment is late
• Whether you take deposits and whether they're refundable

Under the Consumer Rights Act 2015, the price must be as stated at the point of sale. You can't add hidden charges after the customer has committed to buy.

If you're a sole trader dealing with invoicing regularly, having a reliable system to manage payments makes life considerably easier. A tool like Accounted can help you track invoices and see at a glance who's paid and who hasn't, so nothing falls through the cracks.

4. Delivery and Performance

For products, specify delivery timeframes, methods, and costs. Under the Consumer Rights Act 2015, goods must be delivered within the time agreed, or if no time was agreed, within 30 days. If you can't deliver on time, the consumer has the right to cancel and receive a full refund.

For services, set out your expected timelines, any milestones, and what happens if there are delays (from either side). If the client needs to provide materials, feedback, or approvals for you to do your work, make that clear here — and specify the consequences of late provision.

5. Cancellation and Cooling-Off Rights

This is an area where UK consumer law is very specific. Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, consumers who buy online, by phone, or at a distance have a 14-day cooling-off period during which they can cancel for any reason and receive a full refund.

There are exceptions — for example, bespoke or personalised goods, perishable goods, sealed goods that have been opened (for hygiene reasons), and digital content that has been downloaded. Your T&Cs should clearly explain the customer's cancellation rights and any applicable exceptions.

For services, if you begin providing the service during the cooling-off period with the consumer's express consent, they may lose their right to cancel once the service is complete. But they must be told this upfront.

6. Refunds and Returns

Your refund policy must comply with the Consumer Rights Act 2015. Under this Act:

• Goods must be of satisfactory quality, fit for purpose, and as described. If they're not, the consumer is entitled to a refund, repair, or replacement.
• Services must be performed with reasonable care and skill. If they're not, the consumer is entitled to a repeat performance or a price reduction.
• Digital content must be of satisfactory quality, fit for purpose, and as described.

You can offer a more generous refund policy than the statutory minimum (and many businesses do, as a customer service measure), but you cannot offer less. A statement like "no refunds under any circumstances" is unenforceable if the goods or services are faulty.

Our article on the Consumer Rights Act and sole traders goes into more detail on your obligations here.

7. Limitation of Liability

A limitation of liability clause caps the amount your business could be held liable for if something goes wrong. This is standard in business terms and conditions. You might, for example, limit your total liability to the price paid for the goods or services in question.

However, you cannot exclude or limit liability for:

• Death or personal injury caused by negligence
• Fraud or fraudulent misrepresentation
• Breach of the statutory implied terms under the Consumer Rights Act 2015

Any attempt to do so would be considered an unfair contract term and unenforceable under the Consumer Rights Act 2015 and the Unfair Contract Terms Act 1977.

8. Intellectual Property

If your business creates original work — designs, content, software, photography — your T&Cs should address intellectual property rights. Specify who owns the work and under what conditions. Common approaches include:

• IP transfers to the customer upon full payment
• You retain IP but grant the customer a licence to use the work
• You retain rights to use the work in your portfolio

9. Complaints and Dispute Resolution

Explain how customers can raise complaints and how you'll handle them. This is both a legal requirement (under the Alternative Dispute Resolution for Consumer Disputes Regulations 2015, you must tell consumers about any ADR scheme you're willing to use) and good business practice.

A clear complaints process can prevent small issues from escalating into formal disputes.

10. Governing Law and Jurisdiction

State which country's laws govern the contract and which courts have jurisdiction. For most UK sole traders, this will be "the laws of England and Wales" (or Scotland, or Northern Ireland, as appropriate) and the courts of that jurisdiction.

If you sell to customers in other countries, be aware that consumer protection laws in the customer's own country may also apply.

Making Your Terms Enforceable

Having beautifully written terms and conditions is pointless if they're not properly incorporated into your contracts with customers. Here's how to make sure they're enforceable.

Bring Them to the Customer's Attention

Your T&Cs must be brought to the customer's attention before the contract is formed — that is, before they buy from you or agree to hire you. Hiding them in a corner of your website where nobody would think to look isn't sufficient.

For online sales, best practice is to include a checkbox during the checkout process where customers confirm they've read and accepted your terms. Include a prominent link to the full T&Cs.

For in-person sales or services, include your T&Cs on your quotes, proposals, or booking confirmations, and draw the customer's attention to them.

Use Clear Language

Under the Consumer Rights Act 2015, contract terms must be written in plain and intelligible language. If a term is ambiguous, it will be interpreted in the way most favourable to the consumer. Avoid jargon and legalese wherever possible.

Don't Include Unfair Terms

The Consumer Rights Act 2015 gives courts the power to declare unfair terms unenforceable. A term is considered unfair if it creates a significant imbalance between your rights and the consumer's rights, to the detriment of the consumer. Examples of potentially unfair terms include:

• Excessive cancellation fees
• Terms that allow you to change the price after the contract is formed without giving the consumer the right to cancel
• Terms that exclude all liability for everything
• Terms that give you disproportionate power over the contract

The Competition and Markets Authority (CMA) publishes guidance on unfair contract terms, which is worth reviewing.

When to Review and Update Your T&Cs

Your terms and conditions should be a living document. Review and update them when:

• The law changes (consumer protection law is updated periodically)
• Your business model changes (new products, services, or pricing)
• You start selling to new markets (different countries have different consumer protection rules)
• You identify gaps based on real-world experience (a customer dispute that your T&Cs didn't adequately address)

It's good practice to include a "last updated" date on your T&Cs so customers can see how current they are.

Getting Help

You can draft your own T&Cs using templates and guides, but for anything beyond a straightforward business, it's worth getting professional input. Options include:

• Legal template services — companies like Docue, Rocket Lawyer, and LawBite offer customisable T&C templates
• Solicitors — for bespoke terms tailored to your specific business
• Trade associations — many industry bodies provide template terms for their members

Whatever route you take, make sure the final document accurately reflects how your business actually operates. A generic template that doesn't match your real practices can be worse than having no T&Cs at all.

The Takeaway

Terms and conditions might not be the most thrilling part of running a business, but they're genuinely important. They protect you, inform your customers, and provide a clear framework for resolving problems. Take the time to get them right, keep them updated, and make sure your customers can easily find and understand them.

Accounted helps UK sole traders stay on top of their bookkeeping and tax. Start your free 30-day trial at getaccounted.co.uk

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Related reading:

• Client Contracts — Why You Need One and What to Include
• The Consumer Rights Act — What Every Sole Trader Should Know
• How to Handle a Client Complaint Professionally

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