If you run a professional practice, consultancy or service business, you may use the term ‘terms of business’ rather than ‘terms and conditions’ to describe the document that governs how you engage with clients. This guide explains what a terms of business agreement typically covers, how it differs from consumer-facing terms and conditions, and what to check if you are relying on one that has not been reviewed in a while.
What is a Terms of Business Agreement?
A terms of business agreement sets out the basis on which a professional or service business engages with its clients, covering scope of work, fees, payment terms, liability, confidentiality and how the relationship can end. The term is used interchangeably with terms and conditions or terms of engagement in many contexts, but tends to be the phrase professional services firms, such as accountants, consultants, agencies and intermediaries, use specifically to describe their standard client engagement terms.
Terms of Business Versus Standard Terms and Conditions
The distinction is more about audience than legal substance. Terms and conditions more commonly describe the rules governing the sale of goods or services to consumers or business customers generally, often published on a website or attached to an order. Terms of business more commonly describe the engagement terms a professional practice uses with each client individually, often issued alongside a scope of work or engagement letter rather than published for anyone to accept. Both types of documents need the same core elements done properly: clear scope, payment terms, liability provisions and a way for either side to end the relationship.
A Specific Regulatory Context: Insurance Intermediaries
In insurance broking specifically, a Terms of Business Agreement, often abbreviated to TOBA, has a distinct and more formal meaning under FCA rules, setting out the regulatory basis on which a broker or intermediary acts for a client or insurer. This is a specialist regulated area with its own compliance requirements, separate from the general terms of business a consultancy or agency would use, and firms operating in this space should confirm any advice reflects the specific FCA requirements that apply to regulated intermediaries.
What Should Be in a Terms of Business Agreement?
A well drafted terms of business agreement should cover the scope of work and what falls outside it, fees and payment terms including what happens if a payment is late, liability and any limitation on it, confidentiality obligations where sensitive client information is involved, termination rights and notice periods for both sides, and how changes to the scope are agreed and charged for as the relationship develops.
When Terms of Business Actually Get Tested
Terms of business rarely get read closely until something goes wrong, most often a dispute over what was included in the original scope, a client refusing to pay for work they say was not agreed, or a disagreement over who owns the output of the work once the relationship ends. A terms of business agreement that clearly addresses scope changes, payment triggers and ownership of deliverables prevents most of these disputes from escalating in the first place.
If your terms of business have not been reviewed recently, or you are setting up a new practice and need terms drafted from scratch, our solicitors can help on a fixed fee basis.
How MAR Legal Can Help
Our solicitors draft and review terms of business for consultancies, agencies and professional practices across Manchester and the UK, covering scope, fees, liability and termination. Where a business needs consumer-facing terms and conditions rather than client engagement terms, the same fixed fee approach applies, and we can advise on which document fits your business model.
To discuss your agreement get in touch today:
Final Thought
The label on the document matters less than what it says. Whether you call it terms of business, terms and conditions or an engagement letter, the document only earns its keep if it clearly covers scope, payment, liability and how the relationship ends, in language that will still make sense to whoever reads it after a dispute has already started.