Terms Of Service

Terms of Service

When to Use

Activate when a founder needs to create terms of service for a product launch, update existing terms to reflect new features or business model changes, or assess whether current terms adequately protect the company. Also activate when the user asks about acceptable use policies, liability limitations, or user agreement structures.

Context Required

• From startup-context: product type, platform, business model, pricing structure, target customer (B2B vs B2C), geographic markets, company legal entity and jurisdiction.
• From the user: what the product does, how users interact with it, whether users create or upload content, whether the product integrates with third-party services, payment/subscription structure, any past disputes or known risk areas, and whether the audience includes enterprise customers who will negotiate terms.

Workflow

1. Scope assessment — Determine the product type (SaaS, marketplace, API, mobile app) and audience (consumers, SMBs, enterprise). This dictates the tone, enforceability approach, and which clauses are essential.
2. Risk identification — Map the key liability scenarios for this specific product: data loss, service outages, user-generated content issues, integration failures, billing disputes.
3. Draft terms — Write each section using the template below. Use plain language with legally precise phrasing. Avoid unnecessary jargon while maintaining enforceability.
4. Enforceability review — Flag clauses that may be unenforceable in certain jurisdictions (e.g., blanket liability exclusions are limited in the EU, mandatory arbitration is restricted in some states and countries).
5. Presentation guidance — Recommend how to present the terms (clickwrap vs browsewrap), versioning strategy, and how to notify users of changes.

Output Format

A terms of service document with the following sections.

Section Template

1. Agreement to Terms — How acceptance works (clickwrap recommended), age requirements, authority to bind an organization.
2. Description of Service — What the product does, what it does not guarantee, service levels if applicable.
3. Account Registration & Security — Account creation requirements, user responsibilities for credentials, account sharing policy.
4. Acceptable Use Policy — Prohibited activities (abuse, scraping, reverse engineering, illegal use, competitive benchmarking). Be specific to the product.
5. User Content & Data — Who owns user-uploaded content, license grants the company needs to operate the service, what happens to data on termination.
6. Data Ownership & Portability — Clarify that customer data belongs to the customer. Describe export capabilities and formats.
7. Intellectual Property — Company retains ownership of the platform, trademarks, proprietary algorithms. User gets a limited license to use the service.
8. Payment & Billing — Subscription terms, billing cycles, price change notice periods, refund policy, what happens on failed payments.
9. Free Trials & Freemium — Terms specific to free tiers, conversion expectations, feature limitations, data retention after trial expiry.
10. Service Availability & SLAs — Uptime commitments (or lack thereof), scheduled maintenance windows, force majeure.
11. Limitation of Liability — Cap on damages (typically limited to fees paid in prior 12 months), exclusion of consequential/indirect damages.
12. Indemnification — User indemnifies company for misuse, content violations, third-party claims arising from user's use.
13. Termination — How either party can terminate, what happens to data post-termination (retention period, deletion timeline), survival clauses.
14. Dispute Resolution — Governing law, jurisdiction, arbitration clause if applicable, class action waiver if applicable.
15. Modifications to Terms — How changes are communicated, notice period (30 days recommended), continued use as acceptance.
16. Miscellaneous — Severability, entire agreement, assignment, waiver, notices.

Frameworks & Best Practices

Plain Language Approach

• Write so a non-lawyer customer can understand their obligations and rights.
• Use "you" and "we" consistently. Define them once at the top.
• Use short paragraphs and bullet points for lists of prohibited activities.
• Bold or highlight the most impactful clauses (liability caps, auto-renewal, arbitration).
• Provide a "key terms summary" sidebar or header for each section with a one-line plain English explanation.

SaaS-Specific Considerations

• Data ownership is non-negotiable. Customer data must unambiguously belong to the customer. The company gets only the license needed to provide the service.
• Aggregated/anonymized data. If you use customer data in aggregate for analytics, benchmarking, or model training, disclose this explicitly and ensure it is truly de-identified.
• API terms. If you offer an API, specify rate limits, authentication requirements, and restrictions on redistribution of API output.
• Integration liability. Clarify that the company is not responsible for third-party integrations or data passed to third-party services at the user's direction.
• Sub-processors. List or link to sub-processors (hosting, payment, analytics). Enterprise customers expect this.

Enforceability Guardrails

• Clickwrap over browsewrap. Require an affirmative action (checkbox, click) to accept terms. Browsewrap ("by using this site you agree") is weakly enforceable.
• Conspicuous disclosure. Arbitration clauses, auto-renewal terms, and liability limitations must be prominently displayed to be enforceable in many jurisdictions.
• Consumer protection limits. EU and UK consumer law restricts unfair terms. Blanket liability exclusions for negligence are generally unenforceable for consumers.
• Auto-renewal laws. California (ARL), FTC guidelines, and EU consumer directives require clear disclosure of auto-renewal and easy cancellation.
• Unilateral modification. Courts increasingly scrutinize "we can change these terms at any time" clauses. Provide reasonable notice (30 days) and allow termination if users disagree.