The Essential Guide to Business Contracts in the UK: What SMEs Must Include in 2026

Whether you run a startup, manage a growing SME, or operate across the UK and UAE, clear and well‑structured business contracts remain one of the most effective ways to protect your business.

At MAR Legal, we regularly support business owners who want contracts that are practical, affordable, and legally sound, without unnecessary complexity. This guide explains what UK business contracts should include in 2026, common mistakes to avoid, and how to ensure your agreements hold up if something goes wrong.

What is unfair dismissal?What’s Changed? Overview of Employment Law ReformsWhy business contracts still matter in 2026

A business contract is not just paperwork. It is a legally binding agreement that sets expectations and gives you protection if a relationship breaks down.

Strong contracts help you to:

• Define responsibilities clearly
• Reduce misunderstandings and disputes
• Enforce payment and delivery terms
• Protect confidential information and intellectual property

Relying on verbal agreements, email chains, or generic templates often leads to uncertainty, and that uncertainty usually favours the party who breaches the agreement.

What every UK business contract should include

Regardless of the size of your business or the industry you operate in, most contracts should contain the following key sections.

1. Correct legal details of the parties

Your contract must clearly identify:

• The correct legal names of all parties
• Registered addresses
• Company registration numbers (where relevant)

Using trading names instead of registered company names is a common mistake and can cause serious enforcement issues later.

2. A clear scope of work or services

This section should explain:

• What is being provided
• Any deadlines or milestones
• What is excluded from the agreement

Vague descriptions such as “consultancy services” or “marketing support” often lead to disputes. Precision protects both sides.

3. Payment terms

Payment clauses should state:

• How much is payable
• When invoices will be issued
• Payment deadlines
• What happens if payment is late

UK businesses are often entitled to charge statutory interest on overdue invoices under the Late Payment of Commercial Debts legislation.

MAR Legal also supports businesses with unpaid invoices through our UK debt recovery services.

4. Confidentiality provisions

Confidentiality clauses protect:

• Commercial information
• Client data
• Pricing models
• Business processes

They are especially important for startups, technology businesses, and companies sharing information with suppliers or partners.

5. Intellectual property ownership

Your contract should clearly state:

• Who owns work created under the agreement
• Whether rights transfer on payment
• Whether any licences are granted

For example, if you hire a designer or developer, ownership of the work does not automatically pass to you unless the contract says so.

6. Termination rights

Every contract should explain:

• How the agreement can be ended
• How much notice is required
• What happens on termination

Without a termination clause, you may be locked into an arrangement that no longer works for your business.

7. Dispute resolution and governing law

This section clarifies:

• How disputes will be handled (negotiation, mediation, court)
• Which country’s law applies

This is particularly important for businesses working across borders. MAR Legal frequently advises UK companies working with UAE‑based partners through our Dubai legal services.

8. Limitation of liability

Liability clauses help manage risk by:

• Capping financial exposure
• Excluding indirect or consequential losses

Many SMEs overlook this section, leaving themselves exposed to claims far exceeding the value of the contract.

9. Force majeure clauses

Force majeure provisions address events outside anyone’s control, such as:

• Natural disasters
• Government action
• Supply chain disruption

These clauses gained importance during COVID‑19 and remain relevant for international trade and services.

10. Signatures and execution

Contracts should be:

• Signed by authorised individuals
• Dated correctly
• Stored securely

Electronic signatures are legally recognised in the UK when used properly.

Common contract mistakes SMEs make

We regularly see businesses run into problems because they:

• Use free templates without adapting them
• Fail to update old contracts
• Ignore jurisdiction when working internationally
• Do not include termination or liability limits
• Assume emails are “good enough”

Fixing contract issues after a dispute arises is far more expensive than addressing them upfront.

A real example: contract protection in practice

A Manchester‑based technology startup engaged a supplier to deliver a software integration. When delivery was delayed, the supplier refused to refund advance payments.

Because MAR Legal had previously helped the client put in place:

• Clear delivery deadlines
• Refund rights
• UK‑based dispute resolution

The client recovered over £18,000 without court proceedings.ructures.
Keep clear records of performance reviews, probation conversations and warnings. Tribunals will look closely at these when considering fairness.

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How MAR Legal supports SMEs and founders

MAR Legal provides practical business contract support for:

• Startups and scale‑ups
• SMEs and family businesses
• UK‑UAE entrepreneurs
• Contractors and consultants

Our approach is:

• Clear and straightforward
• Fixed‑fee wherever possible
• Tailored to your business, not generic templates

You can learn more about our business and commercial services here:
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Business contract checklist for 2026

Before signing any agreement, ask yourself:

• Are the parties correctly identified?
• Is the scope of work clear?
• Do payment terms protect cash flow?
• Is IP ownership addressed?
• Can the contract be ended fairly?
• Is the governing law correct?

If the answer to any of these is unclear, the contract needs reviewing.

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