Supply of Services Agreement UK: B2B Contract Guide

What this document is

A Supply of Services Agreement is a commercial contract between two businesses, where one (the supplier) agrees to perform specified services for the other (the customer) in return for payment. Because both parties are contracting in the course of business, the consumer protections that apply to individual buyers do not generally bite here.

Instead, the relationship is governed largely by what the parties themselves write down, supplemented by the implied terms in the Supply of Goods and Services Act 1982 for contracts entered into before October 2015, and the Consumer Rights Act 2015 framework for consumer-facing deals (which this is not). In commercial practice, that means the written contract does most of the heavy lifting.

It should describe the services with enough precision to be enforceable, set the commercial terms, allocate risk through warranties, indemnities and limitations of liability, and spell out how either side can walk away. A well-drafted agreement also addresses intellectual property ownership, confidentiality, data protection, and how disputes are handled, which are the areas that tend to cause the most trouble when a relationship sours.

How to use this document

1. Define the services precisely. Vague scope is the single biggest source of disputes I see in commercial services work. Write a clear statement of work that sets out deliverables, milestones, acceptance criteria, exclusions, and any dependencies on the customer. If the work will evolve, agree a change control process rather than leaving scope open-ended.
2. Agree the commercial terms. Set out the fees, whether they are fixed, time-and-materials, or milestone-based, and be explicit about expenses, VAT, invoicing frequency, and payment windows. Late payment interest under the Late Payment of Commercial Debts (Interest) Act 1998 is worth addressing directly rather than relying on the statutory default.
3. Allocate risk sensibly. Look carefully at warranties, indemnities, and the limitation of liability clause. Caps on liability, carve-outs for death, personal injury and fraud, and exclusions of indirect or consequential loss are all standard, but the numbers and categories need to reflect the actual commercial exposure on both sides.
4. Deal with IP, data and confidentiality. Decide who owns deliverables and any pre-existing materials used to create them. If personal data is involved, the UK GDPR requires a written data processing agreement where the supplier processes data on the customer's behalf. Confidentiality obligations should survive termination.
5. Set out termination and exit. Cover termination for convenience, for material breach, and for insolvency. Think about what happens on exit: handover of materials, final invoicing, return or destruction of confidential information, and any transitional assistance. Getting the exit mechanics right is often more valuable than the rest of the contract combined.

Common questions