B2B terms of trade: sales and delivery terms

When you sell goods or services to other businesses, your general terms of trade are your legal foundation. They set out the terms that apply to all dealings with business customers, and they save you from negotiating individual terms at every sale.

But badly worded terms can do more harm than good. And in B2B trade, consumer-protection rules are not a safety net. Here there is as a rule full freedom of contract, and it is up to you to secure your rights.

What are B2B terms of trade?

B2B terms of trade (also called sales and delivery terms, general business terms or standard terms) are a set of standardised terms that apply to transactions with business customers.

They are typically incorporated into:

• Quotes and order confirmations
• Invoices
• The website's order flow
• Contracts and framework agreements

B2B vs. B2C: the crucial difference

The most important difference is that consumer-protection law does not apply in pure B2B sales.

	B2C (to consumers)	B2B (to businesses)
Right of withdrawal	14 days on distance sales	None, unless agreed
The Sale of Goods Act's rules	Mandatory in the consumer's favour	Can be departed from by agreement
Unfair contract terms	Special protection (Contracts Act ss. 38 a to 38 c)	Freer scope to agree
Payment terms	Limited options	Freely agreed

This means B2B terms can contain clauses on limitation of liability, retention of title and payment terms that would not be allowed towards consumers.

What should B2B terms of trade contain?

1. Scope and incorporation

Describe which dealings the terms apply to and how they become part of the agreement:

• That the terms apply to all agreements on delivery between you and business customers
• That the terms are deemed accepted when the customer places an order
• That the customer's own terms are not accepted without an express written agreement

The so-called "battle of the forms" is a classic problem of contract law: both parties refer to their own standard terms, so who wins? Include a clear provision that rejects the counterparty's terms.

2. Quote and order confirmation

• For how long is a quote binding?
• When is the agreement concluded (typically on the order confirmation)?
• Must changes to the order be confirmed in writing?

3. Prices and payment

Prices:

• Are prices including or excluding VAT?
• Is freight included (state the relevant Incoterm)?
• The right to adjust prices on significant fluctuations in raw-material prices
• The right to correct obvious pricing errors

Payment:

• Payment terms (for example net 14 or 30 days or advance payment)
• Consequences of late payment: default interest and reminder fees
• The right to withhold delivery on non-payment
• The option of a credit check and a change of payment terms

Default interest: the Interest Act sets a default interest rate (the National Bank's reference rate plus 8 percentage points) that automatically applies on late payment in business relationships. The parties can agree a higher rate.

4. Delivery and delivery time

• The place of delivery (state the relevant Incoterm, for example EXW, FCA, DAP or DDP)
• The delivery time: use "approx. [X] working days", and avoid committing to a fixed date unless you are sure
• State that an expected delivery time is indicative unless expressly agreed as binding
• The consequences of late delivery (limitation of liability)

Incoterms 2020 are standard terms for delivery in trade. It is good practice to state the relevant Incoterm in B2B agreements.

5. Retention of title

A retention of title ensures that the seller keeps ownership of the goods until the buyer has paid in full. It is especially relevant in credit sales and where there is a risk of the buyer's insolvency.

For a retention of title to be valid, it must as a rule:

• Be agreed at the latest on delivery of the goods, not afterwards
• Relate to the goods sold and the credit for those specific goods
• Lapse when the goods are fully paid for

For motor vehicles, retention of title is registered in the Vehicle Register (Bilbogen). The rules on retention of title, including on credit purchases, are found in particular in the Credit Agreements Act.

6. Passing of risk and shipment

State when the risk for the goods passes from seller to buyer. This typically follows from the chosen Incoterm, for example on handover to the carrier. Also state who bears the risk of transport damage.

7. Duty to examine and complaints

The Sale of Goods Act's starting point in B2B: the buyer has a duty to examine the goods on receipt. If the buyer does not complain without undue delay about visible defects, the right to rely on the defect can be lost.

Include:

• A complaint deadline for visible defects (for example a certain number of working days from receipt)
• A complaint deadline for hidden defects
• Requirements for the form of the complaint (in writing, with a description of the fault)
• An absolute deadline (for example 12 months from delivery)

8. Defects and remedy

• The seller's right to remedy or replace as the first response
• A deadline for the remedy
• The relationship between a proportionate reduction and cancellation
• Any limitation of the buyer's remedies to repair or replacement

9. Limitation of liability

B2B contracts allow wide scope to limit liability. Typically:

• Maximum liability: limited to the invoice value of the disputed delivery
• Exclusion of indirect loss: loss of operations, lost profit and similar consequential loss are not covered
• Force majeure: relief from liability on extraordinary events

Note that a limitation of liability can be set aside in cases of gross negligence or intent.

10. Force majeure

State what constitutes force majeure, for example:

• Natural disasters, war and epidemics
• Acts of authorities and export bans
• A serious shortage of raw materials and components (subject to ordinary market risk)

State the consequences: temporary relief, and a right to cancel if the situation lasts beyond an agreed period.

11. Product liability

The seller can be liable for damage that a defective product causes to third parties' property or person (the Product Liability Act). Liability for personal injury cannot be excluded. For damage to business property, the parties can agree a mutual exclusion of liability.

12. Intellectual property

State that the seller keeps all intellectual property rights to its products, designs and specifications.

13. Confidentiality

Business information, price lists and technical specifications should be protected by a confidentiality clause.

14. Choice of law and venue

• State that Danish law applies
• State the venue (your local district court or the Maritime and Commercial Court)
• Possibly an arbitration clause (for example the Danish Institute of Arbitration)

NL 92 and other standard terms

In some industries, common terms developed by trade organisations are used. NL 92 (Nordic terms of delivery for machinery and other mechanical, electrical and electronic equipment) is one example. Be aware that such sector-specific terms can differ from your own.

Incorporation: how do the terms become part of the agreement?

For the terms of trade to be binding, they must be incorporated correctly:

1. A clear reference: refer to the terms and state where they can be found
2. Easy access: link directly to the terms in the quote and order confirmation
3. Timing: the terms must be communicated before the agreement is concluded, not afterwards
4. Documentation: keep documentation that the buyer has received or seen the terms

Frequently asked questions about B2B terms of trade

Are B2B terms of trade required by law?

No, but they are strongly recommended for any business with ongoing B2B sales. Without standard terms, the default rules of the Sale of Goods Act and contract law apply, which do not necessarily suit your business.

Can we copy a competitor's terms of trade?

It is not advisable. Terms of trade must reflect your business's specific model, products, delivery method and risk profile. A copy from a competitor can contain terms that do not suit your business at all.

What is a "battle of the forms"?

It arises when two businesses each refer to conflicting standard terms. The most important thing is to have a clear provision that rejects the counterparty's terms and to send an order confirmation that expressly refers to your own terms.

Can we limit liability for loss of operations in B2B?

Yes. In B2B agreements it is as a rule possible to exclude liability for indirect loss, loss of operations and lost profit. It is widespread practice, but an exclusion can be set aside in cases of gross negligence or intent.

Conclusion

B2B terms of trade are an investment that pays off. They save negotiation time, create predictability and protect your business against unforeseen claims. Use a thorough template, adapt it to your business, and ensure correct incorporation at every sale.

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The content of this article is for guidance only and does not constitute legal advice. Consult a commercial lawyer for advice on your specific terms of trade and contract terms.