Business Energy Cooling-Off Period UK: When You Can Cancel and When You Cannot

A domestic energy customer who signs up for a new supply contract has a statutory 14-day cooling-off period in which to cancel without penalty, whether the contract was signed online, over the phone, or with a doorstep sales representative. Most business owners assume an equivalent right applies to their commercial energy contract. In the vast majority of cases, it does not. The distinction matters most when a business has been approached by an aggressive sales agent or broker, signed under pressure, and then reconsidered - only to be told the contract is binding from the point of signature.

The Consumer Contracts Regulations 2013 and the B2B exemption

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which implement the EU Consumer Rights Directive into UK law and remain operative post-Brexit under the European Union (Withdrawal) Act 2018, provide consumers with a 14-day right of cancellation for distance and off-premises contracts. The right applies from the date the contract is concluded or, for service contracts, from the date performance begins if the consumer requests this.

The critical word is "consumers." The regulations define a consumer as a natural person acting for purposes wholly or mainly outside their trade, business, craft, or profession. A limited company is not a natural person and cannot be a consumer under this definition. An LLP is not a natural person. A partnership of companies is not a natural person. These entities have no cooling-off right under the Consumer Contracts Regulations 2013 regardless of how the contract was sold or the size of the business.

This is the B2B (business-to-business) exemption. It removes the statutory cancellation right from the large majority of commercial energy contracts. Suppliers and brokers are aware of it and rely on it when customers attempt to cancel shortly after signing.

When the 14-day right does apply: sole traders and individual partners

A sole trader is a natural person. Where a sole trader signs a business energy contract for their business and the contract is concluded off-premises - at their home, at a business premises visited by the sales agent without a prior appointment, or at a location other than the supplier's own business premises - the Consumer Contracts Regulations 2013 may apply, giving a 14-day cancellation right.

The analysis is fact-specific. The key questions are:

• Is the contracting party a natural person (sole trader or individual partner) rather than a company or LLP?
• Was the contract concluded off-premises, by distance (phone, online, email), or on-premises at the supplier's place of business?
• Is the contract primarily for business purposes or does it have a personal element?

Where a sole trader can establish that the contract was concluded off-premises and they were acting in a capacity that engaged the consumer definition, the 14-day right is available. The cancellation must be communicated clearly to the supplier before the 14-day period expires. The supplier must provide information about the cancellation right at the time of contracting; failure to do so extends the cancellation period to 12 months and 14 days under Regulation 31 of the 2013 Regulations.

Ofgem SLC 7A protections for microbusiness customers

For microbusiness customers - those with fewer than 10 employees, electricity consumption below 100,000 kWh per year, or gas consumption below 293,000 kWh per year - Ofgem's Standard Licence Condition 7A provides a set of protections that partly addresses the absence of a statutory cooling-off right. These are not a cooling-off right in the statutory sense, but they create obligations on suppliers that can give microbusiness customers relief from contracts they did not properly understand or consent to.

The SLC 7A obligations most relevant to post-contract cancellation scenarios include:

• The requirement that broker commission be disclosed before the contract is signed. A contract where commission disclosure was not made may give grounds for the microbusiness customer to challenge the contract's validity or to request release without penalty.
• The requirement that contract terms - including exit fees and rollover provisions - be clearly communicated. A failure to communicate material terms may support a mis-selling complaint that results in contract release.
• The route to the Energy Ombudsman for unresolved complaints, which gives microbusiness customers a cost-free route to third-party adjudication on contract disputes that larger commercial customers do not have.

What counts as the start of the cancellation period

For contracts where a cooling-off right does apply (sole trader off-premises or distance contracts), the 14-day period starts from different points depending on the contract type:

• For a service contract (which a continuous energy supply contract is), the 14 days runs from the date the contract is concluded - the date the offer was accepted and the agreement was formed.
• If the consumer requests that performance begin before the 14-day period expires (for example, by requesting that the switch proceed immediately), the consumer retains the right to cancel during the 14 days but must pay for the services actually provided up to the point of cancellation.
• If the supplier did not provide the required cancellation information under Regulation 10 or 13 of the 2013 Regulations, the cancellation period extends to 12 months and 14 days from the original contract date.

For broker-arranged contracts, the date the contract is "concluded" may be disputed. Where a broker obtains a signed agreement form but the supply contract is not formally entered into by the supplier until a later date, the 14-day period may run from the later date. Businesses should obtain written confirmation of the contract commencement date from the supplier to establish the precise start of any cancellation window.

How cooling-off interacts with broker-arranged contracts

The majority of SME energy contracts are arranged through energy brokers or third-party intermediaries. The involvement of a broker adds complexity to the cooling-off analysis in several ways.

First, a broker acting as the supplier's agent (rather than as the customer's agent) may be in a position to bind the customer to the contract. Where this is the case, the contract is concluded at the moment the broker secures the customer's agreement, not when the supplier separately countersigns.

Second, where a sole trader or individual partner exercises a cancellation right, the cancellation is served on the supplier (or the broker as the supplier's agent), not simply communicated to the broker. A cancellation communicated to a broker who is acting as the customer's agent rather than the supplier's may not satisfy the requirement under the Consumer Contracts Regulations 2013 for cancellation to be communicated to the trader.

Third, where a broker failed to disclose commission in accordance with SLC 7A requirements, the customer's ability to challenge the contract is stronger. The Misrepresentation Act 1967 provides that a contract induced by a misrepresentation may be voidable, and an active assertion by a broker that the service was "free" when in fact commission was being received may constitute a misrepresentation. This provides an alternative route to contract exit for microbusiness customers who cannot rely on the Consumer Contracts Regulations 2013 directly.

Practical steps if a business wants to cancel after signing

Businesses that want to cancel after signing a commercial energy contract should take the following steps:

1. Identify the contracting parties: establish whether the customer is a natural person (sole trader) or a company/LLP. This determines whether any statutory cooling-off right applies.
2. Check how the contract was concluded: on-premises at the supplier's premises (no cooling-off), by distance or off-premises (potential cooling-off for sole traders).
3. Review the contract for any contractual cancellation right: some suppliers include a voluntary cancellation window - commonly 5 to 14 days - in their standard SME terms as a commercial practice, even where no statutory right exists. Check the contract before raising a complaint.
4. For microbusiness customers: raise a formal complaint citing any failure to disclose broker commission or failure to communicate material contract terms. Request a copy of the broker commission disclosure provided before the contract was signed.
5. If the contract was induced by misrepresentation: document what was said by the sales agent or broker, and raise a formal complaint citing the Misrepresentation Act 1967. This applies to all business customers, not just sole traders.

Frequently asked questions

Editorial disclaimer: This article describes the cooling-off and cancellation framework for business energy contracts based on the Consumer Contracts Regulations 2013, Ofgem licence conditions, and related legislation. It does not constitute legal advice. Businesses seeking to cancel a contract should seek independent legal advice appropriate to their specific situation.

Does a limited company have any right to cancel a business energy contract after signing?

No statutory cooling-off right applies to a limited company under the Consumer Contracts Regulations 2013. A company's only routes to exit are: a contractual cancellation window if the supplier includes one voluntarily, a complaint-based route if the contract was mis-sold or material terms were not disclosed, or the exit fee provisions in the contract. Mis-selling or failure to disclose material terms can support a complaint and potential release, but there is no automatic cancellation right equivalent to the 14-day consumer right.

What should a sole trader do if they want to cancel within 14 days of signing off-premises?

The sole trader should serve a clear written cancellation notice on the supplier (not just the broker) before the 14-day period expires. The notice must identify the contract, the supply address, and state unambiguously that it is a cancellation under the Consumer Contracts Regulations 2013. The supplier must acknowledge the cancellation and stop the switch process. If the switch has already completed and supply has begun, the sole trader may be required to pay for energy consumed up to the cancellation date.

What if the broker told a limited company it had 7 days to cancel?

If a broker or supplier sales agent represented that a company had a 7-day cancellation right that in fact does not exist at law, this may constitute a misrepresentation under the Misrepresentation Act 1967 if the company relied on it in deciding to sign. The company should document the representation and raise a formal complaint with the supplier. If the supplier refuses to release the company from the contract, the misrepresentation argument may be pursued through the Energy Ombudsman (for microbusiness customers) or through civil court proceedings.

Does the 14-day right apply to online contracts signed on a comparison website?

An online contract is a distance contract under the Consumer Contracts Regulations 2013. Where the customer is a natural person (sole trader) acting in a way that engages the consumer definition, the 14-day right applies from the date the contract is concluded. The fact that the contract was arranged through a comparison website does not affect the cancellation right, provided the other conditions are met. However, where the customer is a limited company or LLP, the B2B exemption applies regardless of how the contract was concluded.

Can a microbusiness cancel a contract by relying on SLC 7A alone?

SLC 7A does not create a direct cancellation right equivalent to the 14-day consumer right. Its protections are primarily procedural: requiring disclosure of broker commission and material terms before the contract is signed, and providing a route to the Energy Ombudsman for disputes. A microbusiness that did not receive the required commission disclosure before signing has grounds to raise a complaint that may result in contract release, but the outcome depends on the specific circumstances and the Ombudsman's assessment rather than being automatic.

How we verified this

This article draws on the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 at legislation.gov.uk, the Consumer Rights Act 2015 at legislation.gov.uk, the Misrepresentation Act 1967 at legislation.gov.uk, and Ofgem's Standard Licence Condition 7A and microbusiness guidance at ofgem.gov.uk. The description of the B2B exemption reflects the definition of "consumer" in the 2013 Regulations. No aggregator, broker, or comparison site content was used as a primary source.

Sources

• Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 - legislation.gov.uk
• Misrepresentation Act 1967 - legislation.gov.uk
• Ofgem: Microbusiness customer protections - ofgem.gov.uk
• Citizens Advice: Cancellation rights for distance contracts - citizensadvice.org.uk

For more on the related rights around rollover contracts and mis-selling, see mis-sold-business-energy-claim-uk. For guidance on the complaint and escalation process, see business-energy-complaint-process-uk.