What Every SaaS Terms of Service Must Include

Why your Terms of Service matters more than you think

Most founders treat Terms of Service as a box to tick. In practice, your ToS is the document that governs what happens when things go wrong: a user demands a refund six months in, a customer claims your software caused them financial loss, or someone tries to reverse-engineer your product. Without clear terms, you have little protection.

Section 1: What the service actually is

Define clearly what your service does and — equally important — what it does not do. If you are an AI tool, state that outputs are not professional advice. If you are a marketplace, clarify that you are not a party to transactions. Vague descriptions invite disputes.

Section 2: Account terms

Cover: minimum age, responsibility for account security, accurate information requirements, and your right to suspend or terminate accounts. Be explicit about what behaviours lead to termination — this protects you when you need to remove an abusive user.

Section 3: Subscription and payment terms

State: pricing, billing frequency, what happens at renewal, how to cancel, what "cancellation" means (immediate vs end of period), and your policy on price changes. Ambiguity here is the source of most payment disputes.

Section 4: Acceptable use

List prohibited behaviours explicitly. Generic "don't do anything illegal" clauses are insufficient — specify the categories of misuse you anticipate: abuse of rate limits, reselling access, scraping, illegal content generation. Link to a separate Acceptable Use Policy if needed.

Section 5: Intellectual property

Clarify who owns what. Typically: you own the platform, users own their data and outputs, and you have a limited licence to process their content to deliver the service. Do not claim ownership over user-generated content unless you have a specific reason and disclose it prominently.

Section 6: Limitation of liability

This is the most legally critical section. Cap your liability at the amount the user paid you in the past 12 months. Exclude indirect, consequential, and punitive damages. If you are UK-based, you cannot exclude liability for death, personal injury, or fraud — but you can limit everything else.

Section 7: Governing law and dispute resolution

State which country's law governs the agreement and which courts have jurisdiction. If you are a UK company, use England and Wales. If you have significant US users, consider adding a mandatory arbitration clause for US disputes.

Section 8: Changes to the terms

Reserve the right to update your terms with reasonable notice. The standard is 14–30 days for material changes. Specify how you will notify users (email, in-app notice) and that continued use constitutes acceptance.