Thing is , you didn't need to read through any terms from what I see

You made a booking in economy class
You subsequently chose to make a change to the booking
The agent calculated the fare difference at which point you had choice to purchase or not

It doesn't read that you were purchasing the economy ticket with the intent to make a change to business class later ( where knowing terms would be useful ) , just a post purchase choice to do so

What is the cancellation penalty on the original fare ? perhaps could just rebook and cancel the original

Looking at the cheapest option, it looks like the cancellation penalty may well be GBP200 . GBP694+GBP200 will be only GBP894 which is cheaper than the GBP1426 to upgrade

There is also a chance that the agent may have incorrectly selected the class / auto pricing didnt pick up the lowest possible option and it might be worth a 2nd call and see whether another agent can successfully get the lower of the fares before going for cancel and rebook