Although Terms & Conditions are legally binding agreements under the Contracts Act 1950 intended to protect both business and customer, many Malaysian businesses either rely on a generic template or skip them entirely.
Until the unexpected happens, little do these businesses realise the extent of their legal exposure!
Below, we break down what Terms & Conditions are, why they matter, and when you need them.
Defining Terms & Conditions
Terms & Conditions, also called “Terms of Service” or “Terms of Use”, are a legal contract between your business and your customers or users that usually sets out:
- what customers can and cannot do
- your obligations as a business
- what happens if something goes wrong, and
- how disputes will be resolved
When a customer buys from your online store, uses your app, or engages your services, they are agreeing to follow your Terms & Conditions.
Main implications for businesses
As legally binding contracts, businesses that invest in clear and tailored Terms & Conditions enjoy two main benefits:
- Legal protection: Terms & Conditions can protect your business from liability and define how disputes will be resolved.
- Business clarity: Customers to know what to expect, leaving less room for misunderstandings.
Here are some hypothetical situations of the above benefits in action:
- a graphic design agency can include a clause that limits free revisions to three rounds, avoiding scope creep
- co-working spaces can specify minimum notice periods for cancellation, protecting their revenue and operational planning
- online course providers can clearly state that materials cannot be downloaded or shared, protecting their intellectual property
Without Terms & Conditions, the above situations can quickly lead to unresolved disputes.
Key clauses
| Acceptance of Terms | How and when customers agree (e.g., by using the website, completing registration, sign the Terms & Conditions) |
| Rights & Obligations | What customers can and cannot do (e.g., prohibited activities) |
| Products / Services Description | What you are offering and limitations |
| Payment Terms | Pricing, payment methods, currency, invoicing, late payment consequences |
| Refund & Cancellation Policy | Conditions for refunds, exchanges, cancellations, and any associated fees |
| Delivery / Shipping Terms | Delivery timelines, shipping costs, risk of loss, failed delivery procedures |
| Intellectual Property Rights | Who owns the content, trademarks, logos, and how users can / cannot use them |
| User-Generated Content | Rights and responsibilities regarding content users upload or post |
| Limitation of Liability | How much liability your business accepts for damages, losses, or failures |
| Warranties & Disclaimers | What guarantees you provide (or don’t provide) about your products/services |
| Termination & Suspension | Your right to terminate the arrangement or suspend user accounts |
| Third-Party Links / Services | Disclaimers about external websites or integrated services you are not responsible for |
| Dispute Resolution and Governing Law | How disputes will be handled and which country laws apply |
When to use Terms & Conditions
Although beneficial to all businesses, Terms & Conditions are especially important in business-to-consumer (B2C) scenarios where you are dealing directly with customers, such as when:
- You have a mobile app or website: Any app or website that allows user registration, in-app purchases, or collects user data should have clear Terms & Conditions.
- You provide services with memberships or packages: This includes gyms, salons, beauty shops, co-working spaces, or any subscription-based service where customers pay recurring fees.
- You provide services like education or recreation: Tuition centres, enrichment classes, music schools, and similar businesses benefit from clear Terms & Conditions that cover enrolment, fees, and withdrawal policies.
Some businesses prefer to call their terms by different names, Client Agreement, Service Agreement, Membership Terms, or Engagement Terms, and that’s perfectly fine.
What matters is that the essential terms are captured clearly and enforceable under Malaysian law.
Terms & Conditions vs Privacy Policy
Some business owners assume that Terms & Conditions and Privacy Policy are the same thing, but these are two separate documents that serve different purposes, and most businesses need both.
| Terms & Conditions | Privacy Policy |
| Governs the relationship between you and your customer | Explains how you collect, use, and protect your customer’s personal data |
| Covers payments, refunds, liability, user behaviour, intellectual property | Required under the PDPA 2010 if you collect personal data |
| Protects your business interests | Protects customer privacy rights |
| Sets rules for using your service/product | Sets rules for how you handle customer data |
Furthermore, the two documents should reference each other.
For example, your Terms & Conditions should include a clause stating, “Your use of our services is also governed by our Privacy Policy, which can be found at [link].”
Let ELP tailor your Terms & Conditions
Terms & Conditions are legally binding contracts that define the legal relationship between you and your customers, and which courts will refer to when disputes arise.
We draft custom Terms & Conditions tailored to your business, whether for a website, a school, or a mobile app. No legalese overload. Just clear, enforceable terms that protect your interests.
