Terms and Conditions for Startups –
Legally Sound from the Start
You’re in the process of building something—a SaaS product, an online store, or a creator platform. You’re in the middle of your first customer meeting, and your first deal is about to close. Right now, you need solid terms and conditions—because without effective terms and conditions, you risk your contract being worthless in the event of a dispute.
Basics
What are terms and conditions—and why do they apply to you right away?
Terms and conditions are pre-formulated contractual terms that you use for a wide variety of contracts. That may sound abstract, but it’s part of your daily routine as a founder: As soon as you set up a checkout process, provide a user agreement for your app, or work with customers based on consistently identical terms, you have terms and conditions—whether you call them that or not.
This is legally regulated in Section 305 of the German Civil Code (BGB). A clause is considered a General Terms and Conditions if it is pre-formulated, intended for a wide range of contracts, and unilaterally imposed by the user—that is, by you. Case law assumes that a clause constitutes General Terms and Conditions if it is used three or more times.
The legislature has deliberately made the law governing standard terms and conditions strict: Anyone who sets pre-formulated terms is unilaterally exercising their freedom to draft them. Your contracting party can only agree or refuse—they cannot help shape the content. That is precisely why the law scrutinizes whether your clauses are fair. And that is precisely why it is so important that you do not simply copy standard terms and conditions from somewhere else.
For you as a startup founder, this means: Your legal foundation is established with your first customers. Those who only react once the first dispute arises usually end up at a disadvantage.
Important for your startup: You don’t have to call your terms and conditions “General Terms and Conditions.” Terms such as “Terms of Use,” “Terms of Service,” or “Service Terms” are subject to the same legal framework—with the same requirements regarding validity and incorporation.
Your Startup Type
Three Types of Startups, Three Problem Areas in Terms of Service
Not every startup needs the same terms and conditions. What you really need depends on how you make money—and who your customers are. Here are the three most common scenarios in practice:
SaaS & Digital Products
You sell access to software, an app, or a digital service. Your terms and conditions must be particularly precise in this regard.
- Clearly define usage rights
- Disclaimer for Outages
- Automated subscription renewal
- Data protection interface for the GDPR
- Cancellation and data deletion
E-Commerce & Online-Shops
You sell both physical and digital products directly to end customers through your own online store.
- Right of Withdrawal and Withdrawal Policy
- Delivery Terms & Shipping Costs
- Warranty and Returns
- Payment Terms
- Terms and Conditions for Consumers vs. Businesses
Creator Economy & Creative Industries
You produce content, license content, or operate a platform for creative services.
- License clauses for content
- Usage rights for third parties
- Compensation clauses & payment terms
- Acceptance and amendment clauses
- Exclusivity and non-compete clauses
Of course, there is some overlap—a SaaS tool for creators needs elements from all three areas. That’s exactly why a customized consultation is worth it instead of a generic template.
Risks
What happens if you don't have any terms and conditions—or if they're poorly written?
The honest answer: usually nothing at first. Until something goes wrong. And then a lot all at once. The law governing terms and conditions contains several pitfalls that are regularly underestimated in practice.
Effective engagement – the invisible hurdle
Terms and conditions only become part of a contract if you have effectively incorporated them. This is governed by Section 305(2) of the German Civil Code (BGB): When concluding a contract, you must explicitly refer to your terms and conditions and give your customer a reasonable opportunity to read them. A link in the footer of your website or a note on the invoice is not sufficient for this purpose.
A common startup problem: The checkout button says “Buy Now”—but there’s no active checkbox for the Terms of Service, and no clearly visible link before the click. In this case, your Terms of Service haven’t been effectively incorporated. You can’t rely on a single clause—not even the disclaimer.
Surprising clauses never work
Clauses that are so unusual that a contracting party could not have reasonably anticipated them generally do not become part of the contract under Section 305c(1) of the German Civil Code (BGB)—even if they were formally included. This applies in particular to startups that include hidden broad liability disclaimers or automatic renewal clauses. In such cases, the “surprise clause” provision applies.
Individual agreements always take precedence
If you’ve made a specific promise in an email or conversation with a customer—such as a particular delivery time, a special return policy, or a discount—that promise takes precedence over your standard terms and conditions under Section 305b of the German Civil Code (BGB). The law refers to this as the priority of individual agreements. Verbal agreements that you may have long since forgotten can override your written terms and conditions.
If any provisions are invalid, the general law applies
If a clause in your terms and conditions unreasonably disadvantages the other party to the contract (as determined under Section 307 of the German Civil Code), it is invalid. While the rest of the contract remains in effect, the gap is then filled by the applicable statutory provisions. And that is usually less favorable to you than a well-drafted, valid clause.
RISK 1
No incorporation → The Terms and Conditions do not apply at all
RISK 2
Surprising clause → does not form part of the contract
RISK 3
A verbal agreement → overrides your terms and conditions
RISK 4
Invalid clause → statutory provisions apply
Contents
The Most Important Terms and Conditions for Your Startup
What needs to be included—and how should it be included? Here are the key clauses that I regularly draft or review for startups in the tech, e-commerce, and creative industries:
Scope of Work
What exactly do you provide—and what don’t you? The more specific you are here, the less room there is for disputes. Especially with SaaS, availability, support hours, and update policies must be clearly defined. Vague wording leads to customers expecting more than you can deliver.
Payment Terms & Price Adjustments
When is payment due, how can it be made, and what happens if payment is late? Price adjustment clauses are particularly sensitive from a legal standpoint—they must be objectively justified and transparent; otherwise, they are invalid under Section 308(4) of the German Civil Code (BGB). A blanket statement such as “We reserve the right to adjust prices” is too vague.
Limitation of Liability
You can limit your liability in your terms and conditions—but not arbitrarily. This is not permitted in cases of willful misconduct or gross negligence. In cases of ordinary negligence, it is only permitted to a limited extent. And even stricter standards apply when dealing with consumers. A disclaimer clause that goes too far is invalid and will not protect you at all in the event of a dispute.
Term & Termination
This is particularly crucial in the case of subscription models. Automatic renewals must be communicated clearly and transparently. Notice periods must be reasonable. In many cases, clauses requiring written notice for cancellations are invalid under Section 309(13) of the German Civil Code (BGB)—the legal situation changed in this regard in 2016.
Copyright & IP Clauses
Who owns what when the partnership ends? For SaaS: Does customer data remain with the customer? For creator platforms: What licenses do you grant yourself for uploaded content? Without clear terms, unclear legal situations can quickly arise—which is particularly sensitive when you’re in talks with investors.
Privacy Policy
Your Terms of Service are not a substitute for a Privacy Policy—but they must clearly refer to it. This is mandatory for e-commerce and SaaS products that handle user data. Make sure that your Privacy Policy and your Terms of Service do not contain any contradictory statements.
Jurisdiction & Governing Law
You can specify a venue for legal proceedings in your terms and conditions when dealing with businesses—this is a good idea for B2B startups. However, this is generally not possible when dealing with consumers. If you also operate internationally, the applicable law must be clearly defined—especially for SaaS products with users in the EU.
Sources of error
The Most Common Mistakes in Terms and Conditions for Startups
In consulting practice, the same issues keep cropping up. Not out of malice—but because founders are pressed for time, and terms and conditions are often the last item on their to-do list. Here are the classic ones:
Error 01
Copied terms and conditions without proper adaptation
You took the terms and conditions from a similar startup and tweaked them slightly. The problem is that terms and conditions from other countries (especially U.S. terms and conditions) do not comply with German law. And even German templates often don’t fit your specific business model—which results in invalid clauses.
Error 02
No effective engagement at checkout
The link to the Terms and Conditions is somewhere on the page. But there is no active confirmation box, and no notice is provided at checkout. Result: The Terms and Conditions have not been effectively incorporated. You cannot rely on a single clause—not even the disclaimer.
Error 03
Changes to the Terms and Conditions via email without consent
You’ve updated your terms and conditions and notified customers via newsletter. Does their silence count as consent? No—that’s not valid. Retroactive changes to terms and conditions require active consent from your existing customers if they are to apply to existing contracts.
Error 04
Invalid clauses as a false sense of security
You’ve drafted a comprehensive disclaimer—and think you’re covered. But the clause is invalid under Section 307 of the German Civil Code (BGB) because it’s too broad. In the event of a dispute, the law will apply instead. The clause has never helped you.
Error 05
No difference between B2B and B2C
Different—and often less stringent—requirements apply to businesses than to consumers. If you try to cover both with the same terms and conditions, they will either be too limited for B2C or unnecessarily complex for B2B. A better approach is to use separate terms and conditions or clearly differentiated clauses.
Error 06
The Terms and Conditions are not kept up to date
The business model has changed, and new features have been added—but the terms and conditions are still the same as they were at launch. Outdated terms and conditions don’t reflect the current service and could be used against you in the event of a dispute. Terms and conditions need to be updated regularly.
The most important principle: Terms and conditions are not a one-time document that you can simply check off your list. They are a living tool that grows with your startup. At the latest when you secure your next round of funding, enter new markets, or expand your product portfolio, you should have your terms and conditions reviewed.
Frequently Asked Questions
Frequently Asked Questions from Founders
Answers to the questions we’re asked most often.
Are terms and conditions mandatory for online stores?
There is no legal requirement to have terms and conditions in Germany—but without them, you’re at a significant disadvantage as a shop owner. That’s because without your own terms and conditions, any unresolved issues are simply governed by statutory regulations, which are often to your disadvantage: shorter payment terms, broader liability, and no ability to limit warranty coverage. In addition, there are statutory information requirements in e-commerce (Sections 312 et seq. of the German Civil Code), which you must fulfill regardless of whether you have terms and conditions—namely, the right of withdrawal policy, legal notice, and delivery times. In practice, no reputable online store operates without terms and conditions.
What are the Terms and Conditions?
AGB stands for General Terms and Conditions. This refers to pre-formulated clauses that a company uses for a large number of similar contracts—for example, the terms of use for an app, the checkout terms of an online store, or the delivery terms of an agency. The key point is that the other party cannot negotiate the content but can only accept or reject it. This is precisely why strict legal requirements apply to which clauses are even valid—as regulated in Sections 305 through 310 of the German Civil Code (BGB).
When are terms and conditions invalid?
Terms and conditions may be invalid for several reasons. First, if they were not properly incorporated—that is, if there was no explicit reference to them at the time the contract was concluded and no reasonable opportunity to review them existed (Section 305(2) of the German Civil Code (BGB)). Second, if individual clauses unreasonably disadvantage the contracting party (Section 307 of the German Civil Code (BGB))—for example, blanket liability exclusions or unilateral termination rights. Third, if clauses are so unusual that no one could have reasonably anticipated them (Section 305c of the German Civil Code (BGB)). In these cases, the statutory provisions apply in place of the clause.
How should terms and conditions be worded?
Terms and conditions must be clear, understandable, and transparent—this is required by the so-called transparency requirement under Section 307(1), second sentence, of the German Civil Code (BGB). Clauses must not be ambiguous; they must be legible to the average contracting party and their content must be comprehensible. The font size and layout must be reasonable—clauses in tiny print that are barely legible do not become part of the contract. The following also applies to online stores: The terms and conditions must be savable and accessible.
Which takes precedence: the terms and conditions or the contract?
The individual contract always takes precedence—this is governed by law in Section 305b of the German Civil Code (BGB) and is known as the “priority of individual agreements.” So if you’ve agreed on something specific with a customer that differs from what’s in your Terms and Conditions—whether verbally, via email, or in a quote—that agreement takes precedence over the clause in your Terms and Conditions. This applies, for example, to promised delivery times, special terms, or individual return policies. For you as a business owner, this means: What you promise is binding—even if your Terms and Conditions say otherwise.
Are terms and conditions mandatory?
Legally speaking, no—there is no legal requirement to have terms and conditions. In practice, however, yes—it’s essential. Without terms and conditions, you lack any contractual protection beyond what the law provides. This means full legal liability, no ability to limit liability, and no standardized payment or notice periods tailored to your needs. This is a significant risk, especially for startups that quickly onboard many customers. Anyone operating without terms and conditions leaves it up to the legislature to determine how their business relationships are regulated.
When are the Terms and Conditions considered accepted?
Terms and conditions are deemed accepted if the user was expressly notified of them at the time the contract was concluded, the other party had a reasonable opportunity to read them, and the contract was subsequently concluded. Consent does not need to be expressed in writing—implied conduct is sufficient, such as completing the purchase after being notified. However: Silence alone is never considered consent. And a link to the Terms and Conditions hidden in the footer without an active notice at the time of purchase is not sufficient.
What is the difference between the Terms and Conditions and the Privacy Policy?
Terms and Conditions govern the contractual relationship between you and your customers—specifically, services, liability, termination, and payment. The Privacy Policy governs how you handle personal data and is a legal requirement under the GDPR. The two are independent of one another and cannot be used as substitutes for each other. Your Terms and Conditions should refer to the Privacy Policy but should not contain any data protection provisions—those belong in a separate document. Conflicts between the two can become problematic in the event of a dispute.
Terms and Conditions that really work—tailored to your startup.
I’ll draft or review your terms and conditions with your specific business model in mind—whether it’s SaaS, e-commerce, or the creator economy. No templates, no copy-and-paste solutions. Just a legal document you can rely on when it really counts.
