Terms of business: the boring document that saves your bacon
Nobody starts a business because they love contracts. But the ones who write things down are the ones who sleep at night when a deal goes sideways.
By Robert Festenstein, Head of Legal
Updated 17 June 2026
6 min read
The short version
- Write down what you agreed while you still like each other — not after it's gone wrong.
- Payment terms, liability, IP, termination and how disputes get sorted: get those five right and you've done most of the job.
- A template that doesn't fit your business can be worse than nothing — it lulls you into thinking you're covered.
- A contract that fits, drafted once, tends to pay for itself many times over.
The handshake problem
I've lost count of the business owners who've sat across from me clutching an email chain and a hazy memory of "what we agreed." Not one of them thought they needed a contract — right up until the day they did.
Here's the uncomfortable bit: a handshake deal isn't a relationship built on trust. It's a relationship built on both of you remembering the same thing, months later, when money's tight and memories get conveniently selective. A contract isn't a sign you don't trust the other side. It's the thing that lets you keep trusting them.
The five clauses that earn their keep
You don't need forty pages. You need the handful of terms that decide what happens when something goes wrong:
| Clause | The question it answers |
|---|---|
| Scope | What exactly are you on the hook for — and what aren't you? |
| Payment | When do you get paid, and what happens when they're late? |
| Liability | If it all goes wrong, how much can it cost you? |
| Intellectual property | Who owns the thing you made? |
| Getting out | How does either side end this, and what happens to money owed? |
Get those five right and you've done eighty percent of the work.
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Why the free template is a trap
I know the temptation. There's a contract on the internet for £0 and one from a solicitor that isn't. So people download the free one, change the name at the top, and feel organised.
The problem is that a limitation clause a court won't enforce is worse than no clause at all — because you think you're protected, right up until you find out you aren't. A template written for someone else's business, in someone else's situation, is a coin toss. And you only find out which way it landed when you're already in the fight.
What a good contract actually buys
Peace of mind is the boring answer. The real answer is leverage. When a deal turns into a dispute — and some do — the side with clear written terms doesn't just win more often. They usually don't have to fight at all, because the terms make the outcome obvious. If you own a business, your terms of business and your shareholder agreement are the two documents most worth getting right before you need them.
Frequently asked questions
Do I really need a contract if I trust the other person?
Trust isn't the issue — time and memory are. A contract records what you both agreed while things are good, so that if the situation changes or someone's memory gets creative, the terms are clear. It protects the relationship as much as it protects you.
Can't I just use a template off the internet?
You can. It's a gamble. Templates are written for a generic business in a generic situation, and the one clause that later matters is often the one that doesn't fit — or won't hold up. Terms drafted for how you actually trade are far safer, and it's a one-off job.
How long does it take to get proper terms drafted?
For straightforward terms of business or an NDA, days rather than weeks. Tell us your deadline and we'll be honest about what's realistic — then keep to it.
Sources & further reading
This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 17 June 2026. Buzz Solicitors is a trading name of AD Solicitors Limited, a recognised body regulated by the SRA (no. 8011228).
A solicitor with more than two decades' experience in commercial law, dispute resolution, insolvency and judicial review. Robert acts for businesses, directors and individuals on the matters that carry real consequence — and leads Buzz Solicitors.
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