How to Write Terms of Service for Your SaaS
Be scrupulous with legal and operational language when writing your ToS (terms of service). While the process can be tricky, there’s no need to panic. We’ll break down the steps on how to build a Terms of Service that spells out the expectations for both your SaaS business and the people who use it. So let’s consider the critical sections, insights and tips to help you.
Introduction
Create a brief opening statement that displays your brand’s voice and states the purpose of the ToS: to regulate the relationship between your company and users. Be clear when defining key terms early on (e.g., “Service,” “User,” “Content”). Use a table that summarizes the important sections for easy access.
Keep a professional tone and avoid technical or legal jargon throughout. Your introduction should make sense with your brand’s messaging.
Ask yourself: What is the best way to introduce my SaaS product so it will be informative and engaging? Come up with a few options, test them with users, and then choose the one that resonates the most.
“Welcome to [Your SaaS Name], a cloud-based platform designed to streamline your [specific purpose]. These Terms of Service(ToS) control your access and use of our Service. You agree to these terms by accessing or using our service, and are bound by these ToS. Please read them thoroughly.”
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
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Key definitions
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Payment terms
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Limitations of liability
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and more!
Acceptance of Terms
Ensure your users accept your Terms of Service. Consider a clickwrap agreement requiring a click on “I Agree,” or a browsewrap agreement stating that using the service constitutes agreement. Regardless of the method, just make sure it’s easy to see and understand. Also, include the date the ToS started and when it was last updated, and give a link to a printable version.
Always be in compliance with relevant laws (e.g., GDPR, CCPA). Have a mechanism for users to withdraw consent, and if your SaaS targets minors consider age restrictions.
Investigate best practices for your industry and consult with legal counsel to draft a user friendly but legal way to obtain new user content.
“By clicking “I Agree” and/or accessing or using our Service, you acknowledge that you have read, understood, and agree to be bound by these ToS, which form a legally binding agreement between you and [Your Company Name]. We reserve the right to update these ToS.“
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
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Key definitions
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Payment terms
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Limitations of liability
-
and more!
User Accounts
Outline your account registration process, highlighting the required fields and the user’s responsibility for account security (e.g., strong passwords, two-factor authentication). Summarize account verification and recovery procedures, and be clear about restrictions on account sharing or transfer.
With regard to the collection and storage of user data, be in compliance with data protection regulations. Implement security to protect user accounts, and define the results of unauthorized account use.
For secure accounts and protecting user data, think about: What details do I need from users, and how can I keep their information safe? Balance the need for user data with privacy concerns, and implement industry-standard security practices.
“For use of our Service, create an account with complete and accurate details. You are solely responsible for maintaining the confidentiality of credentials for your account and all activities that occur in your account. You agree to notify us immediately of any unauthorized use of your account.“
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
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Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Payment Terms
Explain all the details related to pricing and payment, including:
- Pricing Models: State if your SaaS is free of charge, offers a free trial, has a one-time fee, subscription-based model, or usage-based pricing.
- Subscription Details: Explain subscription tiers (e.g., Basic, Premium), the features within in each tier, and pricing for each tier.
- Billing Cycle: Show the frequency users will be charged (monthly, annually, etc.) and when transaction will occur (e.g., on the same date each month).
- Payment Methods: Display the payment methods accepted (credit cards, PayPal, etc.).
- Taxes: Clarify whether prices include taxes.
- Currency: Specify the currency used for the transaction.
- Refunds and Cancellations: Disclose your refund policy, detailing eligibility criteria, refund process, and timeframes. Show users how they can cancel their subscriptions.
- Price Changes: Reserve the right to alter prices, and detail how notifications of any changes will be made.
“[Your SaaS Name] provides a monthly subscription for $29.99, charged on the same day each month following. We take major credit cards and PayPal. You may terminate your subscription anytime in your account settings. We have a 30-day money-back guarantee for first-time subscribers. We reserve the right to modify prices, and will notify users in advance of any changes.“
To create your payment terms, consider the following:
– What pricing model is best for my product and target audience?
– Is my pricing transparent and easy to understand?
– How can I create a fair refund policy?
To develop a well aligned strategy for your business and users, identify industry standards and analyze competitor prices.
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Intellectual Property
Establish ownership of intellectual property rights by stating your company owns the software code, design, trademarks, and all other proprietary materials related to the business. Address ownership of content created by users within your platform, and detail how your intellectual property can be used.
“All intellectual property rights in our Service, including but not limited to software, design, text, graphics, logos, and trademarks, are owned by or licensed to [Your Company Name]. You retain ownership of any content you create within our Service, but you grant us a worldwide, non-exclusive, royalty-free license to use, reproduce, modify, adapt, publish, translate, distribute, and display that content for the purpose of providing and improving our Service.“
To understand intellectual property considerations:
- Consult with Legal Counsel: Seek professional advice to ensure your ToS protects your intellectual property.
- User-Generated Content: Detail ownership of content created by users and establish guidelines for its use.
- Third-Party Licenses: If you use any third-party materials (e.g., fonts, libraries), make certain you have the necessary licenses and permissions.
By addressing these details, your intellectual property will be protected while still allowing users to leverage your platform’s capabilities.
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Termination
This section describes the circumstances under which either party can terminate the agreement.
- Termination by User: Detail how users can terminate their accounts (e.g., through account settings, by contacting customer support). Clarify any notice periods required for termination.
- Termination by Company: Explain the reasons which entitle termination of a user’s account (e.g., violation of ToS, non-payment, account inactivity). Clarify the time frame you will provide to users before termination, if any.
- Consequences of Termination: Describe the consequences of an account termination, such as data deletion, loss of access to the Service, and refund eligibility (if applicable).
- Survival of Provisions: Specify which provisions of the ToS will survive termination (e.g., confidentiality, indemnification).
“You can terminate your account whenever you wish by [method]. We retain the right to terminate or suspend your account for any reason, including but not limited to breach of ToS. If termined, your right to use the Service will immediately cease, and we may delete your account and data.”
To create fair and broad termination provisions, keep in mind:
- User Rights: Users must have a clear path to terminate their accounts if they wish.
- Company Rights: Safeguard your interests by clarifying grounds for terminating user accounts.
- Data Handling: Clarify how compliance with data protection laws is achieved when accounts are terminated.
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Disclaimer of Warranties
This part is about protecting yourself if the service goes down or has problems. Make it clear that your SaaS is provided “as is,” so you’re not promising it will always work perfectly or be error-free. Also, deny any implied warranties of merchantability or fitness for a particular purpose. To disclaim warranties:
- be super clear about what you’re not responsible for.
- consult a lawyer to ensure it’s all legal.
- set realistic expectations for users.
With a comprehensive disclaimer of warranties like this, you can protect yourself from legal trouble and still be honest with your users.
“Our Service is offered “as is” and “as available” without warranties of any kind, either express or implied, including but not limited to warranties of merchantability, fitness for a particular purpose, or non-infringement. We do not guarantee that our Service will be uninterrupted, error-free, or secure.“
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Limitation of Liability
The goal of this section is to cap your financial responsibility should disputes or damages arise from the use of your SaaS.
- Types of Damages: Specify the various damages covered by the limitation. For example direct, indirect, incidental, consequential, or punitive damages.
- Monetary Cap: Set a maximum amount of liability, either specific in dollar amount or a multiple of the fees paid by the user.
- Exceptions: Determine situations where the limitation of liability may not apply (e.g., gross negligence, intentional misconduct).
To limit your liability:
– Consult legal counsel: Seek professional help to be sure your limitations are in compliance with applicable laws and industry standards.
– Consider insurance: Investigate liability insurance options to mitigate any additional potential risks.
– Balance protection and fairness:, Ensure your limitations are reasonable and don’t unfairly burden users.
“In no event shall [Your Company Name] or its affiliates, directors, officers, employees, agents, or licensors be liable for any indirect, incidental, special, consequential, or punitive damages, including but not limited to loss of profits, data, use, goodwill, or other intangible losses, arising out of or in connection with your use of or inability to use the Service, whether based on warranty, contract, tort (including negligence), or any other legal theory, even if we have been advised of the possibility of such damages. Our total liability to you for all claims arising out of or in connection with the Service shall not exceed the amount paid by you to us for the Service in the twelve (12) months prior to the event giving rise to the claim.“
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Dispute Resolution
This section explains the resolution process with any disputes between you and your users.
- Method: The options are arbitration, mediation, or litigation.
- Process: Describe the resolution process, including how to initiate the dispute, timelines, and associated costs.
- Governing Law: Detail the jurisdiction whose laws will govern the dispute resolution process.
- Venue: Determine where any legal proceedings will take place.
“Any dispute originating from or related to the ToS or the Service will be resolved through binding arbitration in accordance with the rules of the American Arbitration Association. The arbitration will take place in [City, State], and the language of the arbitration shall be English.“
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Governing Law
This section explains any discord caused by the ToS and the legal jurisdiction which will govern them. Opt for the state or country whose laws will apply to the agreement.
“Your use of the Service as well as the ToS shall be governed by and construed in accordance with the laws of [State/Country], without regard to its conflict of laws provisions.“
To ascertain the governing law:
- Consider Your Location: It’s common to choose the state in which your headquarters are located.
- Factor in User Base: If you have global users, choose a jurisdiction with laws that are favorable to businesses and online services.
Free SaaS Terms of Service Template
Create clear ToS that protect your business and build user trust.
-
Key definitions
-
Payment terms
-
Limitations of liability
-
and more!
Miscellaneous Provisions
Consider additional provisions that may not easily fit into other sections of the ToS.
- Severability: State if any provision of the ToS is invalid or unenforceable, the remaining provisions will stay in full force and effect.
- Entire Agreement: Clarify that the ToS constitute the entire agreement between you and the user regarding the Service and supersede any prior agreements.
- Assignment: Be clear on whether each party can assign the ToS to another without the other party’s consent.
- Notices: Explain how communication will take plce with users (e.g., via email, in-app notifications) and how users can contact you.
- Force Majeure: Include a force majeure clause to excuse non-performance due to events beyond your control (e.g., natural disasters, government actions).
- Waiver: Show that a failure to enforce any provision of the ToS does not constitute a waiver of that provision.
“If any provision is found to be invalid or unenforceable, it shall be removed from the ToS and the remaining provisions will remain in effect. These ToS account for the entire agreement regarding the Service and supersede all prior or existing communications and proposals, whether oral or written.“
- Use the ToS template, but customize it to your specific SaaS product and business model.
- Simplify the language. Using terms that anyone can understand helps build trust with your users and reduces misunderstandings. Legal jargon causes confusion and may lead to disputes later on.
- Keep your ToS updated. Review your ToS to ensure they make sense with changes in your business, laws, or industry standards. Alert users to any significant updates in yo
Conclusion
Above all, your ToS should be clear, concise, and easily accessible to your users. Review and update them when changes occur in your business, laws, or industry standards. Creating a robust ToS will benefit both your company and your users.
FAQ
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ToS is a legal agreement that protects your company while setting clear expectations for your users. Issues such as intellectual property, payment terms, liability limitations, and dispute resolution are all addressed within the terms of service.
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Important section examples:
- Account Terms: Define policies for user registration, account management, and acceptable use.
- Definitions: Explain all terms used in your Terms of Service.
- Disclaimers & Limitations of Liability: Mitigate your company’s liability for damages.
- Dispute Resolution: Clarify how disagreements will be resolved (e.g., arbitration)
- Intellectual Property: Be clear about ownership of your software and user-generated content.
- Payment Terms: Detail pricing, billing cycles, refunds, and payment methods.
- Termination: Define situations for terminating accounts by either party.
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You can find a ToS template tailored for SaaS companies here. Be sure to customize it for your specific services and legal needs.
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Review your ToS regularly and update accordingly, especially when anything changes significantly. Don’t forget to notify users of any material updates.
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Your ToS should be easily accessible to users:
- Website: Place a link to your ToS in your website’s footer and sign-up page.
- Sign-up Process: Users must agree to your ToS when creating an account (e.g., with a checkbox).
- Within App/Service: Include a link to your ToS in your app’s settings and help menu.
- Transactional Emails: Use emails to remind users of ToS (e.g., welcome emails, payment confirmations).
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There are no differences between ToS, ToC, and T&C. They are all basically Terms of Service or Terms and Conditions. They all describe the legal agreement between a service provider and its users, defining such things as acceptable use, privacy policies, and dispute resolution.
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