Terms and Conditions: Definition, Key Terms, Examples
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Terms and conditions are the vital details that businesses put in place to ensure that they protect their rights. However, you should also ensure that they are legal, enforceable, and serve their intended purpose. Otherwise, you leave your company exposed to legal liabilities or unwanted consequences.
Rather than leave your contracts to best guesses, check out the information below to learn more about terms and conditions.
What are Terms and Conditions?
Terms and conditions are part of a contract that ensure parties understand their contractual rights and obligations. Parties draft them into a legal contract, also called a legal agreement, in accordance with local, state, and federal contract laws. They set important boundaries that all contract principals must uphold.
Types of legal contracts that contain terms and conditions include:
- Real estate contracts
- End-user license agreement (EULAs)
- Software as a Service (SaaS) agreements
- Construction contracts
- Insurance contracts
- Employment contracts
- Financial contracts
- Information technology contracts
- Freelance contracts
- Healthcare contracts
- Service contracts
- Business contracts
- Entertainment contracts
Please note, the above list is not exhaustive and there are many more types of legal contracts that could be added.
Several contract types utilize terms and conditions. When there is a formal agreement to create with another individual or entity, consider how you would like to structure your deal and negotiate the terms and conditions with the other side before finalizing anything. This strategy will help foster a sense of importance and inclusion on all sides.
What’s Included in Terms and Conditions
Terms and conditions are very broad in the abstract sense. However, they contain more specific provisions depending upon the contract size, industry, and complexity. You will find that there are standard components included across several types of terms and conditions.
Terms and conditions may include:
- Intellectual property rights
- Termination clauses
- Governing law clause
- DMCA notice clause
- Limitation of liability
- Enforceability clause
- Arbitration clause
- Confidentiality clause
- Indemnification clause
- Severability clause
- Definitions clause
Each one of these terms and conditions has a purpose. Some agreements require certain provisions, while others do not. The only way you can be sure about your terms and conditions requirements is by discussing your project with a contract lawyer.
Purpose of Terms and Conditions
The purpose of terms and conditions is to provide a set of instructions for all parties of a contract. They also offer guidance to courts regarding the intent and purpose of the transaction at the time it was created.
Elements of terms and conditions may include:
- Rights
- Obligations
- Duties
- Roles
- Responsibilities
- Consideration
- Handling disputes
- Important dates
- Deliverables
- Payment terms
- Limitations
Terms and conditions exist to inform people of their rights when engaging in a business transaction. They carry legal implications of which both parties should be aware. Carefully review all contracts before signing them since many do not let you cancel them without penalty before fulfilling your obligations.
Terms and Conditions vs. Terms of Service
Terms and conditions and terms of service are different. Using them interchangeably will result in legal errors or miscommunications. Avoid this situation by reviewing their definitions separately.
Below, check out the differences between terms and conditions vs. terms of service.
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Terms and Conditions
Terms and conditions refer to the contractual rights and obligations of a party to any contract. They refer to the broader concept of guidelines that parties must follow in an agreement. Your business can create them for any formalized business agreement.
Terms of Service
In contrast, terms of service, also referred to as terms of use, are the eCommerce terms and conditions surrounding the use of a service or application and must comply with the General Data Protection Regulation (GDPR) guidelines. Software companies utilize them more often than other industries. Use terms of service when your company offers a business service, too.
Examples of Terms and Conditions
Terms and conditions are essential for any type of formal relationship. If you want to protect your legal rights, remember to always get it in writing. Otherwise, it’s your accusation against the other party in case a future dispute arises.
Examples of when to use terms and conditions include:
- Engaging in business with others
- Working for a company as an employee
- Selling products to consumers online
- Organizing a sweepstakes or lottery for participation
- Selling policies an insurance provider
- Offering services as a real estate professional
- Providing services as a construction contractor
- Building websites for customers
- Drafting a prenuptial agreement for high net worth couples
- Lending money or offering services to bank customers
- Hiring a freelancer through a job talent marketplace
- Taking people out on adventure excursions commercially
- Renting out hotel rooms to consumers
- Including a warranty with a consumer product
There are several reasons to include terms and conditions in a transaction. The rule of thumb is to incorporate them into your deal when providing a service or dealing with a sale in excess of $500. You should also utilize them when required by your industry or professional licensing organizations.
Image via Pexels by Linkedin Sales Navigator
Getting Help with Terms and Conditions
Your business must write airtight terms and conditions. An effective agreement mitigates the chances of a dispute and costly litigation. Ensure that an attorney drafts and negotiates your contract when getting help with terms and conditions.
These are a few other reasons that you will want to work with an attorney:
Reason 1. Understands Contracts
Poorly drafted contracts don’t perform as intended. Your attorney will review your situation to determine which provisions you should include in your agreement. They can also participate in negotiation discussions with the other party throughout the process if desired.
Reason 2. Guarantees Enforceability
If your terms and conditions are unenforceable, then they don’t serve your purpose. Your attorney has command of relevant contract laws to prevent this predicament from arising. It’s their job to guarantee that you walk away with an enforceable contract.
Reason 3. Knows Contract Law
Terms and conditions are subject to common contract laws. They must also comply with local, state, and federal laws. Whether you operate one or multiple locations, hire an experienced attorney to help you navigate this aspect of your agreements.
Reason 4. Prepared for a Dispute
It’s reassuring when someone understands your business’ legal history. Contract lawyers are also ready to handle a legal dispute if you face one down the road. They can help you renegotiate terms in case things change or fight them out in court.
Avoid Making Legal Mistakes
As you can see, the most proactive way to get legal help is by speak with contract attorneys. It is tempting to use boilerplate templates, but keep in mind that these agreements were created for another business at one point. Avoid inadvertent legal mistakes that can cost you your company by seeking advice from a licensed professional.
See Real Terms and Conditions Projects
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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Meet some of our Terms and Conditions Lawyers
Tsion L.
Seasoned Fractional COO and Legal Counsel with a proven track record of driving operational excellence and legal compliance in high-growth companies. Skilled in developing and executing strategic plans, optimizing business processes, and managing complex legal matters. Demonstrated ability to draft commercial, partnership, and sponsorship agreements, file trademark applications and manage IP portfolios, support corporate filings and board governance. Industries served: small and medium sized small business, cannabis, hemp, consumer goods, e-commerce, SAAs and health and wellness.
"Great experience, very responsive and professionally handled our needs."
Anna C.
I am a business attorney focused on practical, efficient contract drafting, review, and negotiation for healthcare organizations and growth-stage and established businesses. My work includes commercial agreements such as NDAs, MSAs/SOWs, leases, vendor and services agreements, SaaS, and employment and severance agreements. I partner closely with clients to identify key legal and business risks, deliver clear, business-minded redlines with concise issue summaries, and keep transactions moving. Clients value my responsive turnaround, judgment, and ability to balance risk with commercial objectives.
"Anna was very timely and thoughtful in her communications. She showed not only clear understanding and purposeful/strategic considerations throughout the project, but also made sure to prioritize protecting us and the company when reviewing and revamping our Terms of Service, Privacy Policy, and DPA documents."
Meghan T.
Meghan Thomas is an accomplished transactional attorney. She specializes in IP, real estate and tech related transactional matters, and business contracts. Meghan's innovative leadership style has attributed to the firm's rapid development and presence in the metro-Atlanta market. She obtained her Doctor of Law from Emory University where she worked with the State Attorney General and litigated property disputes for disadvantaged clients. Prior to practicing, Meghan negotiated complex transactions for Fortune 500 tech and healthcare companies. She lives with her family in Southwest Atlanta, enjoys cooking, travel, dance and continues to develop her research in the areas of transactional law and legal sustainability.
"Meghan understood exactly what I needed, outlined the work and the rate in her initial response and followed through just as we discussed. She was professional and insightful, providing excellent counsel on my terms and conditions for my travel business."
Robert Jay H.
My Legal career has focused on representing businesses (corporations and limited liability companies) as general outside counsel. In this capacity, I have drafted a broad range of legal documents as well as analyzed proposed agreements drafted by the other party's attorney to the agreement for the purpose of determining the risks to which my client would be exposed. I maintained the client's minute book if no one in-house was available for that task. Additionally, if requested, I served as a general advisor to the client's executive offers and to its Board of Directors.
"We - a European medtech startup - highly recommend Robert. Very nice communication style, great knowhow and really going the extra mile to help us with professional legal advice entering the US market."
Linda M.
I am a seasoned corporate transactional attorney with over 20 years of combined outside and inside General Counsel experience. My experience includes helping companies of all sizes, including start-ups with general corporate matters and commercial transactions.
"Linda did a great job! She was very prompt with responses, Kind, informative and was true to her word on budget and time of completion. Definitely will use her again."
T. Phillip B.
Attorney creating plans and strategies to help individuals create, build, protect and pass on wealth.
"Very knowledgeable, helpful and responsive, does comprehensive work on short notice. I would recommend and work with again."
August 5, 2021
Simon C.
Corporate counsel with years of in-house experience working with and reporting to board / executive-level and upper management, along with extensive regional / national law firm background in commercial transactions and contracts, complex commercial litigation, and employment matters. Skilled at executing corporate priorities, driving profitability by implementing goal-oriented processes to achieve revenue and productivity targets, and managing company litigation and outside counsel. Recognized for creating policies and practices to address ethical dilemmas and resolving misconduct.
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Browse Lawyers NowLawyer Reviews for Terms and Conditions Projects
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"Rhea is great! Responsive and really up to date on the most current technology laws."
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"Faryal was very responsive and easy to work with. She gave me good guidance. I will def prefer working with her in the future"
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"Robert was great to work with; thorough, thoughtful, and took the time to understand my business and give actionable advice. Thanks Robert!"
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"I had a great experience working with Anne. She was responsive, clear in her communication, and her work was outstanding. I would absolutely recommend her to anyone needing legal support."
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Business Contracts
Terms and Conditions
Washington
Are oral terms and conditions enforceable?
I am a small business owner who is in the process of creating a new website. I am writing my own terms and conditions for the website, and I want to ensure that they are legally enforceable. I understand that written terms and conditions are legally enforceable, but I am unsure if oral terms and conditions are enforceable in the same way. Therefore, I am seeking your advice on the matter.
Merry K.
Whether or not oral (verbal) terms and conditions are enforceable may depend in part on how well the written contract makes it 110% clear that no changes can be made unless they're in writing and signed by all parties in advance. Absent that kind of language in the written agreement, or absent any type of written contract, verbal agreements can be enforced - it's more difficult, of course, than if something is in writing.
Business
Terms and Conditions
New York
How much would it be to draft Terms and Conditions for our App?
We are a mobile app that lets homebakers post free baked goods (feature called 'poom') to be claimed by neighbors. Any one can bake and share. No money is exchanged.
Ema T.
The pricing for drafting terms and conditions depends on the complexity of your services and business. The cost can vary significantly. Lawyers can charge anywhere between $500 to $5,000. Any information provided as an answer to these questions does not constitute legal advice and does not create an attorney-client relationship between the attorney and anyone in relation to any information provided under the Q & A section of this website.
Privacy
Terms and Conditions
California
SaaS Agreement for beta use for anyone
We are a technology SaaS startup in the process of launching our product. We need an agreement that covers our beta period of a few months. We are allowing anyone to use it in this period to market the product. The usage is free of cost. Besides the standard SaaS terms, we want terms to cover for any issues with data loss/protection and anything that can possibly go wrong as we are still in beta and have a few things to fix before we go live in production. Please let me know how much this will cost and when we can have it available. We are a Southern California based company in infancy.
Gregory B.
This is a pretty standard document. The biggest concern is just making sure that the document reflects the reality of how customer data will be used. Usually a Privacy Policy is referenced in the terms, and is likely one of the most important documents for a CA startup.
Ecommerce Store
Terms and Conditions
Illinois
Can I be held legally responsible for a fraudulent eCommerce transaction made on my website?
I recently launched an eCommerce website where users can purchase products from various sellers. However, I am concerned about the possibility of fraudulent transactions being made on the platform. While I have implemented security measures, I want to know if I can be held legally responsible in case a user makes a fraudulent purchase and the seller suffers financial loss as a result.
Randy M.
Many people think that just running an eCommerce platform means they're not on the hook for what other people do. Turns out, it’s not that simple. You may be held legally responsible if your actions (or omissions) contributed to the fraud or failed to prevent it when a duty existed. It really comes down to how involved you are in the actual buying and selling. The more control you have over payments, product listings, prices, inventory, or customer service, the more you start looking like a real seller in the eyes of the law. And when that happens, your liability goes up fast. It’s one thing to be a neutral space for people to connect, like a digital classifieds board. But if you’re handling the money, writing product descriptions, and managing returns, courts might decide you’re not just a platform. You’re a participant. And then there’s the INFORM Consumers Act (15 U.S.C. § 45f). If your site hosts a lot of high-volume sellers (meaning 200 or more transactions a year totaling $5,000 or more), you’ve got to verify their identities. That includes bank account details, tax ID numbers, and contact info. Plus, you have to give buyers a way to report sketchy behavior. If you skip these steps, the FTC can fine you over $53,000 for each violation. That adds up fast. And if a seller ignores your request for info for more than 10 days, you’re legally required to suspend their account until they comply. Now let’s talk chargebacks. When someone uses a stolen credit card on your site, you’re usually the one who takes the hit. In most card-not-present transactions, merchant (not banks) absorb fraud-related chargebacks. That’s just the industry standard. So having a strong fraud prevention system isn’t just good business. It’s survival. Courts also look at how responsible you are with security. Are you using encryption? Are your payment processors secure? Do you have systems that flag weird activity? If you don’t, and someone gets hurt, you could be on the hook for negligence. Intent isn’t required for negligence, but it is for fraud. Courts will look at reasonableness, not intent. If a buyer or seller loses money on your site because you ignored obvious warning signs, they might come after you. And don’t assume Section 230 (47 U.S.C. § 230) will protect you. That law gives platforms some cover when they’re hosting third-party content, but it doesn’t apply across the board. It won’t shield you from your own conduct, criminal liability, IP violations, or anything involving data privacy. And if you’re too involved in the sales process, that protection can disappear altogether. Then there's PCI DSS (Payment Card Industry Data Security Standard) compliance. If you’re processing credit cards directly, you’re expected to meet a long list of security standards. That includes how you store payment data, how you secure your systems, and how often you monitor them. The more volume you do, the higher the expectations. And if you don’t meet them, the consequences can be serious. So what’s the smarter route? Use a third-party payment processor like Stripe or PayPal. They take care of PCI compliance and usually absorb the chargeback risk. You should also set up your business as an LLC or corporation to limit personal exposure. Your terms of service should clearly explain your platform’s responsibilities, disclaim liability for seller fraud, and outline a dispute process. Make sure you properly vet sellers (especially the high-volume ones) and use fraud detection tools from day one. Also, make it easy for users to report suspicious activity, and act quickly when they do. The faster you respond, the less likely it is that someone will accuse you of doing nothing. Keep in mind that laws vary from state to state, and they get even more complicated when you’re dealing with international buyers or sellers. You might be fully compliant under federal law and still run into issues under state or foreign regulations. As your platform grows, your legal obligations grow right alongside it. Bottom line? You can reduce your risk, but you can’t erase it. The best thing you can do is build smart systems, stay compliant, and get legal guidance early. Talk to an attorney who understands eCommerce before you launch. That consultation will cost you a lot less than fixing a legal mess later.
Contracts
Terms and Conditions
Florida
Are there terms and conditions templates?
I am starting a business and I need to create a set of terms and conditions for my customers. I have been researching online, but I am overwhelmed with the amount of information available and I am not sure what the best approach is. I am hoping to find a template to help guide me in the right direction.
Diane D.
Yes. However, a template is a general, non-specific document. Specifying it to your needs can be tricky. You should have a lawyer do it for you because they are trained to limit any liabilities and risks your company may have. It's better to spend the money upfront, then try to get out of a mess letter, which will be much more expensive, especially if you get sued.
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
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Terms and Conditions
Location: Washington
Turnaround: A week
Service: Drafting
Doc Type: Terms and Conditions
Number of Bids: 5
Bid Range: $950 - $2,650
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