How a SaaS Startup Prevented Legal Trouble With Proper User Terms

Quick Summary

A SaaS startup operating in the education space faced potential legal issues due to vague and incomplete Terms of Service. With legal guidance, the company implemented a properly drafted user agreement that prevented disputes and protected the platform from liability. The new terms led to fewer support issues, stronger user trust, and better investor readiness.

Background / The Situation

The client was a growing SaaS startup offering online course delivery and video hosting for coaches and small training companies. Based in the Middle East and targeting an international audience, the platform allowed users to upload, sell, and access educational content.

As user activity grew, the startup began receiving customer complaints about refund policies, intellectual property ownership, and usage rights. Investors started asking if user agreements were in place, and legal partners flagged the platform’s Terms of Service as a high-risk area during due diligence.

The founders realized that their current terms, copied from a template, lacked key provisions and were not tailored to their service model or jurisdiction.

The Problem

Without properly structured user terms, the platform faced several risks:

• Unclear refund and cancellation terms, leading to disputes with customers and chargebacks.
• Ambiguous intellectual property ownership, which allowed content creators to claim the platform was misusing their materials.
• Lack of limitation of liability clauses, which could expose the company to large financial claims.
• Regulatory compliance issues in cross-border operations, especially regarding data privacy and digital content rights.

The issue became urgent when a user threatened legal action over unauthorized access to course materials. The founders knew they needed to act quickly but weren’t sure what to include or how to balance legal safety with user experience.

The Strategy or Solution

Legal Audit and Risk Mapping

The first step was conducting a legal audit of the existing terms and identifying all operational activities that created potential legal exposure:

• Payment processing through Stripe
• Video content hosted on third-party servers
• Cross-border services in the US, EU, and GCC
• Instructor-uploaded content with unclear copyright claims

Custom Terms of Service Drafting

We then drafted new Terms of Service (ToS) and Privacy Policy documents tailored to:

• The platform’s revenue model (subscription + course sales)
• Jurisdiction (UAE registered entity, serving global users)
• The specific roles of buyers (students) and sellers (coaches)
• Integration with third-party tools (Zoom, payment gateways)

Key legal inclusions were:

• License clause: Giving the platform rights to display and distribute instructor content without claiming ownership.
• Refund and cancellation policy: Clearly outlining conditions for refunds and exceptions.
• Disclaimers and limitation of liability: Protecting the company against losses from service disruptions or user-generated content.
• Governing law and jurisdiction: Specifying UAE law and courts to avoid disputes across multiple legal systems.
• Data privacy clause: Covering cookie usage, email communication, and compliance with GDPR for EU users.

Communication and Implementation

Once finalized, the new ToS was:

• Reviewed with the client’s internal developer team for platform integration
• Shared in advance with all active users via email and dashboard notifications
• Made a required step in the registration and upload process (checkbox confirmation)

We also provided plain-English summaries to ensure clarity for non-legal users and avoid drop-off in sign-ups.

The Outcome

Within two weeks of rollout:

• Legal threats from a disgruntled content creator were withdrawn after clarification under the new ToS.
• Customer service tickets related to refunds dropped by 60% due to clearer expectations.
• The startup successfully completed a due diligence review for a seed investment round.

Most importantly, the founders gained confidence that their platform could scale safely across regions without fear of regulatory or legal blind spots.

Key Takeaways

3 Legal Lessons from This Case:

• Templates are not enough. Copy-pasting Terms of Service without legal tailoring can create more risk than protection.
• User roles matter. Platforms must distinguish between different types of users and define their rights and responsibilities clearly.
• Terms are a business asset. Well-drafted ToS can help you pass investor reviews, reduce support costs, and protect your reputation.

Call-to-Action

If you’re running a SaaS or content-based platform, don’t wait for legal trouble to strike. Book a consultation with our legal team to review your current Terms of Service or get a custom draft that fits your unique model.