In general, when your business purchases goods or services from another business, you have similar rights to a consumer. This is the case provided there is no contract that contradicts this.
While these basic rights can't be excluded from contracts with consumers, they can be excluded from business to business contracts. So if you're buying goods and services from another business, you should make sure that the terms and conditions of the contract don't put you at a disadvantage.
For further information about what can and can't be excluded from your contracts, see the Unfair Contract Terms Act.
Business to business rights when buying goods
In the case of goods, unless otherwise stated, you are entitled to demand that your purchases:
- correspond with the seller's description
- are of satisfactory quality - safe, in working order and free of minor defects etc
- are fit for purpose - capable of doing what they're meant to do
Business to business rights when buying services
Similar rights also apply if you're buying services. You can expect services you buy from other businesses to be carried out:
- with reasonable care and skill
- within a reasonable time (where not fixed by contract)
- for a reasonable charge (where not fixed by contract)
It's important to note that these rights don't just apply to purchases. They also cover transactions such as hiring, hire purchase and part exchange.
Protection under the Consumer Credit Act
If you operate as a sole trader you are also protected by the Consumer Credit Act, under which you count as an 'individual'. This applies to partnerships and unincorporated associations. The Act extends consumer credit regulation to business lending where the amount of the credit or hire agreement is £25,000 or less.
The Act does not apply to:
- limited companies
- limited liability partnerships
- individuals of 'high net worth' (as long as this is agreed in writing beforehand). To find out about the Consumer Credit Act, see consumer credit.
To find out about the Consumer Credit Act, see consumer credit.
In general, credit agreements between businesses - ie where credit is provided to limited companies - do not fall under the regulations. You should seek legal advice before entering into a credit agreement with another business.