Terms of service
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The legal contract between a software provider and its users that governs how the product may be used.
Terms of service is the legal agreement users accept before using your product. It covers what they can and cannot do, your liability limits, and what happens when things go wrong.
Every SaaS company has one. Most users never read it. But the ToS matters because it defines the rules of the relationship. It sets expectations around uptime, data ownership, acceptable use, and termination. When a dispute arises, the ToS is the document both sides point to.
For developer tools, the ToS often includes clauses about API usage limits, rate limiting, and what happens if a developer violates the acceptable use policy. Stripe, Twilio, and AWS all have ToS documents that run dozens of pages because the scope of their platforms demands it. The ToS is distinct from an EULA, which governs downloaded software, and from a privacy policy, which covers data collection.
Examples
A developer platform launches a free tier.
The ToS specifies that free tier users get 10,000 API calls per month. Exceeding that limit results in throttling, not a surprise bill.
A SaaS company discovers a customer scraping data.
The legal team references the ToS clause on acceptable use. The customer agreed not to use automated scraping when they signed up.
An enterprise buyer negotiates a contract.
The buyer's legal team requests modifications to the standard ToS. They want custom data retention terms and a specific jurisdiction for disputes.
Frequently asked questions
What is the difference between terms of service and an EULA?
Terms of service govern the use of a web-based service. An EULA governs the use of downloaded software. Many SaaS products use a ToS because the software runs in the cloud, not on the user's device.
Can terms of service be changed without notifying users?
Technically yes, but it is bad practice. Most companies notify users of material changes via email or an in-app banner and give them 30 days to accept or close their account.
Related terms
A legal document that explains what personal data a company collects, how it uses that data, and how it protects it.
A legal contract between a software publisher and the end user that specifies how the software may be used.
A legal contract that prevents one or both parties from sharing confidential information disclosed during a business relationship.
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