How to put customer contracts in place that sell, protect and scale.

This is general information, not legal advice. Consumer contracts in particular are heavily regulated, so take advice before selling to consumers.

Why it matters

Your customer terms decide when you get paid, what you promise, what happens if things go wrong and who owns the data. Weak terms leave you exposed; terms that are too aggressive slow every sale while customers push back. The goal is a fair, standard set of terms you rarely need to negotiate, plus a clear position on the few points customers always raise.

The documents you usually need

• Terms of service or a master subscription agreement. The core contract for SaaS: licence to use the service, fees and payment, term and renewal, acceptable use, IP, confidentiality, warranties, liability and termination.
• Order form. The commercial details per customer: plan, price, users, term and start date. Keep the negotiation here, not in the core terms.
• Data processing agreement. Needed where you process personal data on a customer’s behalf. See the data protection guide in this playbook.
• Privacy policy. A public notice explaining how you handle personal data as a controller, for example website visitors and account holders.
• Service levels and support policy. Only if you can meet them. An optional service credit regime is common for enterprise customers.

Step by step

1. Decide your sales motion. Product-led self-serve products need click-through terms; sales-led deals need an order form and a negotiable agreement. Many tech startups need both.
2. Start from a reputable template, then have it reviewed. A solicitor reviewing and adapting a good template costs far less than bespoke drafting.
3. Set the liability cap. Most B2B SaaS contracts cap each party’s liability, often by reference to fees paid in the previous 12 months. That is a common market position, not a rule. Under UK law you cannot exclude liability for death or personal injury caused by negligence, or for fraud, and other exclusions in B2B contracts must generally be reasonable. Expect enterprise customers to ask for higher caps for data protection breaches.
4. Get the payment terms right. Annual in advance where you can, clear renewal and price increase mechanisms, and a right to suspend for non-payment. Business customers who pay late may owe statutory interest under the late payment legislation.
5. Clarify data and IP. The customer owns its data; you own the platform and any improvements; you may use aggregated, anonymised data if you say so clearly.
6. Write a negotiation playbook. List the clauses customers usually push on, your standard position, your fallback and who can approve each. This lets a salesperson close without a lawyer on every call.
7. Handle consumers separately. If you sell to consumers, consumer protection law applies, including the Consumer Rights Act 2015 and rules on subscriptions and cancellation that are being updated. Get specific advice.

Worked example

Ledgerline, a Manchester finance automation tool, signs its first enterprise customer. The customer’s procurement team sends back 40 comments. Using a negotiation playbook, Ledgerline accepts a mutual confidentiality clause and a 30-day payment term, offers a higher liability cap for data protection claims at twice annual fees, rejects unlimited liability and moves a bespoke feature commitment into the order form as a dated roadmap item. The deal closes in three weeks instead of three months, and the core terms stay the same for the next customer. More on running deals is in the sales playbook.

Common mistakes

• Copying a large competitor’s terms, which may not fit your product or may infringe their copyright.
• Agreeing unlimited liability or uncapped indemnities to win one deal.
• Promising uptime or features you cannot measure or deliver.
• A privacy policy that does not match what the product actually does.
• No contract register, so renewals, caps and special terms are forgotten.

What to measure

• Days from proposal to signed contract, and how many of those days were legal review.
• Percentage of customers on standard terms without amendments.
• Number of live contracts with non-standard liability or service commitments.