October 13, 2026
If you run a website, app or software product, you need Terms of Service: the contract that governs who may use the product, what they may do with it, who owns what, how you get paid, what you’re not liable for, and how disputes are resolved. Terms only bind users who actually agree to them, so use a click-to-accept flow and keep a record of it. Enterprise customers usually sign their own agreement and order form, and your website terms don’t override it.
Key takeaways
Most startup terms need these sections:
Every product is different. A marketplace needs payout, chargeback and seller terms, and a platform hosting user content needs a copyright takedown process.
Use clickwrap. Courts consistently enforce terms where the user takes an affirmative action, such as checking a box or clicking a button, with a clear statement that doing so means agreeing to the terms and a conspicuous link to them right next to it. “By clicking Create Account, you agree to our Terms of Service” with the link adjacent works. An unchecked box the user must tick is stronger still.
Courts generally refuse to enforce “browsewrap,” where the terms sit in a footer link and the user never has to see them. Small grey text, a link several screens away, or a design that buries the notice can sink the whole agreement, including your arbitration clause and liability cap.
Keep proof. Log the user ID, timestamp, version of the terms accepted and the screen they saw. If you’re ever in a dispute, you’ll need to show that this user agreed to this version.
If you charge on a recurring basis, state laws on automatic renewal apply. California’s law, which was tightened in July 2025, and similar laws in New York and many other states require you to clearly disclose the renewal terms before the user subscribes, get their affirmative consent, send a confirmation, and let them cancel online as easily as they signed up. The FTC’s nationwide click-to-cancel rule was struck down in court in 2025, but the FTC still pursues hard-to-cancel subscriptions under existing federal law, so treat easy cancellation as required.
Common SaaS positions are that monthly plans can be cancelled at any time, effective at the end of the current billing period, with no refund for that period, and annual plans are non-refundable after a short window. Whatever you choose, state it clearly. Some state laws require refunds or cooling-off periods for certain consumer contracts, and those override your terms.
If your product uses AI, the terms should answer five questions. Who owns the inputs a user submits? Usually the user. Who owns the outputs? Usually assigned or licensed to the user, to the extent any rights exist. Do you use customer inputs or outputs to train models, and can the user opt out? Users and business customers look for this first. What are the limits? Outputs can be wrong, so disclaim reliance and tell users to review them. And what can’t users do with your outputs? Many companies prohibit using them to build or train a competing model.
Ownership of AI-generated content is a new area of law and likely to shift. Work generated entirely by AI generally isn’t protected by copyright, so draft output terms as “to the extent we have any rights, we assign them to you” rather than promising ownership. Make sure your terms line up with what your AI vendors’ terms allow you to promise.
Users should keep ownership of what they post, and grant you a license to host, display, reproduce and distribute it as needed to run and promote the service. Many platforms now add an express statement that user content isn’t used to train AI models without consent, because users and enterprise buyers look for it.
If you host user content, register a DMCA agent with the US Copyright Office, publish a takedown process, and have a repeat-infringer policy. That preserves your safe harbor from copyright claims based on what users upload.
Choose a governing law and a forum. For consumer terms, many companies require individual arbitration with a class action waiver, which courts generally enforce if acceptance was properly obtained. But arbitration has changed. Plaintiffs’ firms now file thousands of individual claims at once (“mass arbitration”), and because the company pays most of the arbitration fees, a clause meant to reduce risk can become very expensive. If you use arbitration, use a provider’s mass-arbitration procedures or a batching provision, and carve out small claims court so individual disputes can go there.
Some startups skip arbitration for consumers and rely on a liability cap, a small claims carve-out and a court in their home state. For business customers, courts are usually the better choice. See What Should Startup Founders Know About Drafting Strong Contracts?
If you’re a non-US company selling to US users, you can choose your home country’s law, but US consumer protection and state privacy laws still apply to US consumers, and a foreign forum may not be enforced against them.
Post the new terms with a new date, notify users by email or in the product, and keep every prior version. For routine updates, continued use after clear notice generally binds consumers. For material changes, such as pricing, arbitration, data use or AI training, require a fresh click on next login. A change you impose without real notice may not bind anyone, and the FTC has treated retroactive changes to data practices as deceptive.
Usually not. Larger customers sign a master agreement and order form, and that signed contract governs. Your website terms only flow through if the signed contract incorporates them by reference, and even then, sophisticated buyers strike the clause letting you change them unilaterally. For self-serve business customers who click through, your online terms do apply, so write them to work for businesses, including a representation that the person accepting has authority to bind their company. See How Do I Manage Risks When Negotiating Startup Customer Contracts?
No. Their terms describe their product, their data practices and their risk, and they’re protected by copyright. See Can’t My Startup Just Copy Someone Else’s Terms of Service and Privacy Policy?
For more, see Does My Startup Need a Privacy Policy? and Service Level Agreement (SLA). If you’d like help with your terms, see our Terms of Service & Privacy Policy service or contact us.
