Terms of Service: 15 Essential Clauses Every Business Needs

Why Terms of Service Matter

Terms of Service (ToS), also known as Terms and Conditions or Terms of Use, create a legally binding agreement between your business and anyone who uses your website, app, or services. A well-drafted ToS protects your business, sets clear expectations, and can be the difference between winning and losing a legal dispute.

The 15 Essential Clauses

1. Acceptance of Terms

This clause establishes how users agree to your terms:

What to Include:

• Statement that using the service constitutes acceptance
• Age requirements (typically 18+ or 13+ with parental consent)
• Capacity to enter into binding agreements
• Reference to privacy policy acceptance

Why It Matters:

Without clear acceptance, users may argue they never agreed to your terms, making them unenforceable.

2. Description of Services

Clearly define what you offer:

What to Include:

• Core features and functionality
• Any limitations or restrictions
• Service availability and uptime expectations
• Geographic restrictions if applicable

Why It Matters:

Prevents disputes about what users are entitled to receive.

3. User Accounts and Security

Address account creation and responsibility:

What to Include:

• Registration requirements
• Password security obligations
• Account sharing policies
• User responsibility for account activity

Why It Matters:

Establishes that users are responsible for their account security and any actions taken under their account.

4. Acceptable Use Policy

Define permitted and prohibited behaviors:

What to Include:

• Prohibited content (illegal, harmful, infringing)
• Prohibited activities (spamming, hacking, scraping)
• Consequences for violations
• Right to remove content and suspend accounts

Why It Matters:

Gives you authority to take action against abusive users and protects your community.

5. Intellectual Property Rights

Protect your content and respect others':

What to Include:

• Ownership of your content, trademarks, and technology
• License granted to users (limited, non-exclusive)
• User content ownership and license grant to you
• DMCA/copyright infringement procedures

Why It Matters:

Prevents unauthorized use of your intellectual property and clarifies content ownership.

6. User-Generated Content

If users can post content:

What to Include:

• User representations and warranties
• Content license granted to your business
• Right to moderate, edit, or remove content
• Disclaimer of responsibility for user content

Why It Matters:

Protects you from liability for what users post while giving you control over your platform.

7. Payment Terms

For paid services:

What to Include:

• Pricing and billing cycles
• Payment methods accepted
• Auto-renewal terms (with clear disclosure)
• Failed payment procedures
• Price change notification requirements

Why It Matters:

Prevents billing disputes and ensures clear understanding of financial obligations.

8. Refund and Cancellation Policy

Be clear about refunds:

What to Include:

• Refund eligibility and time limits
• Cancellation procedures
• Pro-rata refunds or no refunds
• Subscription cancellation effects

Why It Matters:

Manages customer expectations and reduces chargeback disputes.

9. Limitation of Liability

Critical for protecting your business:

What to Include:

• Disclaimer of indirect, consequential damages
• Cap on total liability (often limited to fees paid)
• Carve-outs for legally required liability
• No warranty for third-party content

Why It Matters:

Limits your financial exposure from lawsuits—one of the most important clauses.

10. Disclaimer of Warranties

Manage expectations about your service:

What to Include:

• "As is" and "as available" disclaimers
• No warranty of uninterrupted service
• No warranty of error-free operation
• No warranty of fitness for particular purpose

Why It Matters:

Reduces liability when things don't work perfectly.

11. Indemnification

Require users to cover certain costs:

What to Include:

• User indemnification of your business
• Coverage for user violations of terms
• Coverage for user content claims
• Procedures for invoking indemnification

Why It Matters:

Shifts certain legal costs back to users who cause problems.

12. Dispute Resolution

Determine how conflicts are resolved:

What to Include:

• Governing law and jurisdiction
• Mandatory arbitration (if applicable)
• Class action waiver (where permitted)
• Informal resolution procedures first

Why It Matters:

Arbitration clauses can significantly reduce litigation costs.

13. Termination

Address how the relationship can end:

What to Include:

• User right to terminate
• Your right to terminate (with or without cause)
• Effects of termination
• Survival of certain clauses

Why It Matters:

Gives you flexibility to remove problematic users.

14. Modifications to Terms

Reserve the right to update:

What to Include:

• Right to modify terms
• Notification method and timing
• Effect of continued use after changes
• Material change handling

Why It Matters:

Allows your terms to evolve with your business without requiring individual consent.

15. General Provisions

Standard but important clauses:

What to Include:

• Severability (invalid clauses don't void entire agreement)
• Waiver (not enforcing once doesn't waive future rights)
• Entire agreement clause
• Assignment restrictions
• Force majeure

Why It Matters:

These "boilerplate" clauses can be crucial in legal disputes.

Industry-Specific Considerations

E-Commerce

• Product descriptions and accuracy
• Shipping and delivery terms
• Return and exchange policies
• Product liability disclaimers

SaaS Platforms

• Service level agreements
• Data handling and security
• API usage terms
• Uptime guarantees

Marketplaces

• Seller verification
• Transaction fees
• Dispute resolution between users
• Platform commission

Content Platforms

• Content licensing
• Monetization terms
• Creator agreements
• Platform algorithms

Enforceability Tips

Make Terms Accessible

• Clear link in footer of every page
• Require checkbox acknowledgment for sign-up
• Keep a copy accessible from user dashboard

Use Plain Language

• Avoid excessive legal jargon
• Use headings and bullet points
• Consider a summary section

Document Acceptance

• Record date and time of acceptance
• Log IP addresses if appropriate
• Keep version history of terms

Stay Current

• Review terms regularly
• Update for legal changes
• Notify users of material changes

Conclusion

Well-crafted Terms of Service are essential protection for any online business. While templates can provide a starting point, every business has unique needs that should be reflected in their terms.

Use SafeDocGen's free Terms of Service Generator to create comprehensive, customized terms that protect your business while building trust with your users.