B2B or B2C?

It’s important not to assume that although they sound very similar, ‘B2C’ and ‘B2B’ contracts are not the same thing. In fact, they are very different and it’s important to know what those differences are to ensure you don’t end up tangled in a B2C/B2B legal maze.

Let’s unpick what those key differences look like, starting with the basics by explaining what they actually are!

What is a B2C contract?

B2C stands for ‘Business to Consumer’. B2C contracts are when businesses sell goods or provide services to individual consumers. For example, when you buy your shopping from your local supermarket or you visit the hairdressers for a new ‘do’.

What is a Business to Business contract?

B2B stands for ‘Business to Business’. B2B contracts are arrangements made between one business and another. For example, the wholesaler that supplies the supermarket with your favourite snacks or the cleaning company that cleans the salon every Saturday morning. It’s important to note here that this includes sole traders and partnerships, not just companies. As long as the parties are acting in the ‘course of business’ this will be a B2B contract. If a customer is buying goods from you to re-sell or provide a service ‘in the course of business’ this will likely be deemed a B2B contract.

What are the key characteristics of a B2C contract?

B2C contracts are regulated by UK consumer law, specifically the Consumer Rights Act 2015. The regulations enforce key requirements upon B2C contracts, such as:

• Contracts must be clear and provide upfront information about goods that are being sold and/or services being offered, including the price and the customer’s cancellations rights.
• The terms cannot be ‘unfair’ or heavily weighted in favour of the business; courts are generally pro-consumer.
• The goods must be of satisfactory quality, fit for purpose and as described, you’ve probably heard this one before!
• You cannot exclude or restrict minimum warranty and refund periods.
• If you are distant selling (such as online) the regulations impose extra rules such as “cooling off” periods, which are generally 14 days which allow the customer to cancel for any reason.
• Terms in a B2C contract may be struck out by a court if they are deemed unfair.

What are the key characteristics of a B2B contract?

There are a few pieces of legislation that shape what you can and can’t include in a B2B contract. The main one is Unfair Contract Terms Act 1977 (“UCTA”). You can expect the following to feature in a B2B contract:

• Liabilities, caps and indemnities can be moulded to fit the business risk for each particular contract, in particular you can exclude or limit indirect loss (such as loss of profit or consequential losses).
• Exclusions for death and personal injury caused by negligence are VOID therefore, you will often see a carve out that will explicitly exclude this under the limitation of liability clause.
• There’s freedom to explore terms that suite the parties’ needs, B2B parties are assumed to be on a ‘level playing field’.
• There’s no automatic right to cancel or refund, therefore it’s good to check whether the terms allow a period for cancelling before signing.
• Higher interest rates can be imposed for late payment as per the Late Payment of Commercial Debts (Interest) Act 1998.

So, what are the key differences between the two?

• B2B do not benefit from the same protection as partis in B2C contracts (e.g. consumer protection laws).
• B2C contracts cannot limit its liability for certain types of breaches, unlike in B2B contracts.
• B2B can be heavily negotiated, unlike B2C contracts.
• B2C tend to be less complex, B2B are complex due to the amendments made through the negotiation stages and flexibility allowed for those amendments.  
• B2B contracts can exclude implied terms however; the exclusion must be clear and pass the Unfair Contract Terms Act 1977 test. It’s important to get exclusions rights because unclear wording is interpreted against the party relying on it (the contra proferentem rule).

The takeaway here is, never assume that these contracts are the same because getting it wrong can lead to major consequences. Have two sets of terms at hand, one that is fitted to B2C and one that is fitted to B2B and if you are unsure, seek legal advice before the ink sets in…

Contact us at Sewell Law if you are looking for legal advice in this area.