Are Terms of Service legally binding?

In many cases, yes. When users accept Terms of Service during signup or checkout (for example via clickwrap acceptance), that acceptance can form a binding agreement governing access to the software.

When do I need a signed agreement instead of Terms of Service?

A signed agreement is most common when a customer requires it for procurement or legal review. In that case, SaaS companies often use an MSA plus an Order Form containing the commercial terms.

What is a common contract structure for SaaS?

A common structure is Terms of Service for self-serve customers, and an MSA plus Order Form for customers who require signatures. This keeps legal terms consistent while allowing pricing and plan details to vary by customer.

Explainer

Do I need a contract to charge for software?

Q: Do I need a contract to charge for software?

Most software businesses rely on either Terms of Service accepted online or a signed agreement such as a Master Subscription Agreement (MSA). Both are contracts—what changes is how the customer accepts them.

Most founders assume they need a signed contract before they can charge customers. In many software businesses, that’s not how it works.

The short answer

If you sell access to software, your relationship with customers is typically governed by one of two structures:

Terms of Service accepted online
A signed agreement such as a Master Subscription Agreement (MSA)

Both are contracts. The difference is how they are accepted.

For most software products, Terms of Service are enough

Many software companies operate using Terms of Service that customers accept during signup or checkout. This is commonly called a “clickwrap” agreement.

When a user creates an account, subscribes, or clicks “I agree,” they accept the Terms of Service. That acceptance forms the contract governing access to the software.

This structure works well for products with self-serve signup, subscriptions, or lightweight sales processes.

Some customers require a signed agreement

In some situations, a customer may ask to sign a contract. This often happens when procurement or legal teams are involved.

In those cases, software companies typically use a Master Subscription Agreement (MSA) together with an Order Form.

The MSA contains the legal terms
The Order Form contains pricing and subscription details

If you want a deeper explanation of this structure, see:

Many founders accidentally create negotiation-heavy contracts

A common mistake is allowing every customer to request custom terms. Over time this leads to dozens of different contract versions and constant negotiation.

Some companies instead adopt a standardized structure:

One consistent legal framework
Commercial terms handled separately
No custom legal drafting per customer

This approach reduces back-and-forth and keeps contracts aligned with how the business actually operates.

A practical structure many SaaS companies use

A common model looks like this:

Terms of Service for self-serve users
MSA for customers who require signature
An Order Form for pricing, term, and plan details

This allows the legal structure to stay consistent while business terms can change from deal to deal.

Prefer a ready-to-use structure?

Baseline Terms provides a standardized SaaS contract bundle that follows this model.

It includes a Terms of Service, MSA, Order Form, and related policies, along with a short implementation guide explaining how to use them together.

Get the Pack — $179