Does the Consumer Rights Act 2015 apply to small businesses?

Generally, no. The Consumer Rights Act 2015 applies to individuals acting for purposes outside their trade. Businesses must instead rely on the Unfair Contract Terms Act 1977, which tests whether a clause is 'reasonable' at the time the contract was made.

What happens if a contract term is found to be unfair?

If a court finds a term in a B2B contract to be unreasonable under UCTA, that specific term will be void and unenforceable. The rest of the contract usually remains valid, provided it can function without the removed clause.

Are 'no-refund' policies legal in B2B contracts?

In a business context, 'no-refund' policies are generally legal unless they are deemed a penalty or are so restrictive that they breach the requirement of reasonableness. However, you are still entitled to a remedy if the service was not provided as described.

Blog · ContractChecker

Common Unfair Terms in Small Business Contracts UK

13 October 2026 · 3 min read

Small business owners often sign contracts under the assumption that the law protects them from unfair treatment. While the Consumer Rights Act 2015 provides robust protections for individuals, business-to-business (B2B) contracts are treated differently. Under UK law, the starting point is freedom of contract, meaning businesses are generally expected to look after their own interests. However, the Unfair Contract Terms Act 1977 (UCTA) and general common law still provide some safeguards against terms that are deemed unreasonable. Understanding these common pitfalls is essential for managing risk and ensuring your commercial relationships remain balanced.

Liability and Indemnity Imbalances

One of the most frequent issues in UK small business contracts is the attempt by a larger supplier to limit their liability entirely while forcing the smaller party to take on unlimited risk. While a company can limit its liability for breach of contract, it cannot legally exclude liability for death or personal injury caused by negligence.

Check for 'total exclusion' clauses that leave you with no recourse if the supplier fails to deliver. A fair contract usually includes a liability cap linked to the value of the contract or the level of insurance coverage held by the parties.

Exclusions of liability for fraud or fraudulent misrepresentation.
Indemnity clauses that require you to pay for the other party's legal mistakes.
Clauses that exclude liability for 'consequential loss' without defining what that entails.

Termination and Automatic Renewals

Commonly known as 'roach motel' clauses, these terms make it easy to enter a contract but nearly impossible to leave. Small businesses are often caught out by automatic renewal clauses that require a very specific, narrow window to cancel—sometimes six months before the contract actually ends.

Review the 'Termination for Convenience' section. If a larger provider can cancel with 30 days' notice but you are locked in for three years, the contract is significantly imbalanced. Look for a mutual right to terminate if the other party breaches their obligations or becomes insolvent.

Hidden Costs and Unilateral Variations

A term is likely to be viewed as unfair if it allows the larger party to change the price or the nature of the service without your consent. These 'variation clauses' give the supplier the power to increase costs mid-term while you remain legally bound to continue paying.

Be cautious of price escalation clauses that aren't tied to a specific index, such as the Consumer Price Index (CPI). If a supplier has the right to change the terms, you should, at the very least, have the right to terminate the agreement without penalty if those changes disadvantage your business.

Using a tool like Jittan's ContractChecker can help you identify these red flags and practical points to consider before you sign a binding agreement.

Identifying unfair terms requires a close reading of the fine print to ensure your business isn't taking on disproportionate risk. By spotting these clauses early, you can negotiate fairer terms that protect your cash flow and operational stability.

Quick answers

Does the Consumer Rights Act 2015 apply to small businesses?: Generally, no. The Consumer Rights Act 2015 applies to individuals acting for purposes outside their trade. Businesses must instead rely on the Unfair Contract Terms Act 1977, which tests whether a clause is 'reasonable' at the time the contract was made.
What happens if a contract term is found to be unfair?: If a court finds a term in a B2B contract to be unreasonable under UCTA, that specific term will be void and unenforceable. The rest of the contract usually remains valid, provided it can function without the removed clause.
Are 'no-refund' policies legal in B2B contracts?: In a business context, 'no-refund' policies are generally legal unless they are deemed a penalty or are so restrictive that they breach the requirement of reasonableness. However, you are still entitled to a remedy if the service was not provided as described.