Why Terms & Conditions are important for startups

Last Updated at: May 28, 2020
Why Terms & Conditions are important for startups
Do you have a great idea? Are you looking to materialise your own startup dreams? You need to be aware of certain ways to safeguard your startup from impending issues. Create and put in place a comprehensive terms & conditions to protect your interests.


Late payment or no payment at all are some of the typical troubles that growing businesses face from clients and vendors. The one way to safeguard the company from such issues is creating a comprehensive Terms and Conditions. This feature expounds upon the protections T&C’s give to any business big or small.

During the early days of a startup company, there is a never-ending list of tasks that have to be completed. Sorting out the terms and conditions should top the list like management of cash flow because we could end up spending a lot of money, wasting time on debt collections. With the right terms and conditions in place, we can ensure correct payments and there will be no room for excuses and late payments

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If the terms and conditions are not mentioned there will be a great impact on the cash flow, equally if the terms are not specified then there is no right to charge interest for late payment and it has to be reimbursed by the supplier.

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Protection of business

If terms and conditions are not specified, the business would be at risk of uncertainty and misunderstandings. It is important to establish the actual arrangement between the two parties involved in any deal. The cover-up should be very well done so that the clients or partners have no opportunity to go back on their world.

 “ If there is nothing in writing there is no proof” “equally, if the terms are in writing, it will serve as an evidence to be produced before the court if needed” essentially terms and conditions have an important role to play when it comes to two parties understanding their duties, rights, roles, and responsibilities.

Prevents misuse

It sets out rules and regulations that need to be followed which is very essential, immaterial of any kind of startup the terms and conditions play a vital role. Well-drafted T&C should act as a manual or recipe book for doing business and having absolute clarity on what should happen in a given situation. It will set out the agreed terms between parties and more importantly what has to be done or what happens if the things go wrong or if one party wants to leave or is unable to continue.

Protects content

The T&C of a business plays a major role in protecting the content, for example in case of a beverage company the formula of the beverage must not be disclosed to anybody. The T&C document should be made in such a way that the formula is not let out and of that matter, even the logo, design. If there is no terms and conditions document in place, there is no way to sue anyone when the content is leaked.

Saves time and money

       Terms and conditions can also save a lot of money by addressing all the issues at the outset which will avoid disputes.

Limits liability

     Terms and Conditions agreements commonly include a warranty disclaimer that limits the owner’s liability in cases where errors are found in the content presented. In case of errors the owner will not be fully liable as mentioned in the document. 

Stipulates governing law

 The Terms and Conditions agreement mentions the law that shall apply to the parties in case any dispute arises.

Consult an expert

Consult a lawyer to chart out the terms and conditions of the startup rather than to copy someone else’s as their business would be different in many ways.

The terms and conditions on the website

It is also important to display T&C on the websites and agree on terms on payment for both receiving funds from customers and paying funds to suppliers in order to avoid financial constraints. These are the importance of terms and conditions.

To put it, in a nutshell, draw up a list of the key commercial terms offered to customers, think of all the scenario of what could go wrong and set up terms accordingly. Terms and conditions should be set up in such a way that it is customer friendly so that the customers, suppliers, entrepreneurs and each and every person involved in the business will be benefited.

To conclude, a few securities creating terms and condition document can give to an established company, or even a small startup are – protect content, prevent misuse, the safety of the business, save time and money, limit liability and clearly stipulate the law that governs any dispute. Also, always consult an expert while writing them down!