Privacy Policy vs. Terms & Conditions: Understanding the Legal Differences for Your Business

Introduction – Privacy Policy vs. Terms & Conditions

India’s digital economy has witnessed a tremendous rise over the past decade. From early-stage startups to well-funded fintech ventures and fast-growing e-commerce platforms, every business operating online tries to build legal infrastructure that ensures compliance. Two of the most commonly misunderstood, and yet legally critical, components of this infrastructure are the Privacy Policy and the Terms & Conditions (also called Terms of Use or Terms of Service).

Many businesses assume that these documents are interchangeable, or worse, optional.. In reality, both are distinct legal instruments that serve different purposes, and not having either one in place, or having them poorly drafted, can expose the business to significant legal, regulatory, and reputational risk.

Before diving into what differentiates a Privacy Policy from Terms & Conditions, it’s important to understand how Indian law looks at online contracts. Digital contracts are not informal disclaimers; they are enforceable legal instruments under the Indian Contract Act, 1872, and can be held up in court if structured incorrectly. With the enforcement of the Information Technology Act, 2000, and the more recent Digital Personal Data Protection Act, 2023, compliance expectations for digital businesses have been redefined, especially when it comes to the treatment of personal data and user relationships.

Below is a brief breakdown of what this article will explore in detail:

What constitutes a valid and compliant Privacy Policy under Indian law, including essential clauses and enforcement risks.
What clauses belong in the Terms & Conditions, and how do they protect your business in commercial and consumer transactions?
The exact legal and operational differences between Privacy Policy and Terms and Conditions, including enforceability, structure, and regulatory necessity.
Drafting tips to help founders and legal teams prepare watertight documents aligned with Indian legal standards.
FAQs and common errors startups make when using foreign templates without adaptation to Indian law.

For any business operating through a digital interface, be it a website, mobile app, SaaS platform, or user registration portal, a well-drafted, accessible, and legally compliant Privacy Policy and Terms and Conditions is essential. These documents are not mere formalities; they serve as critical legal safeguards, build user trust, and support long-term operational continuity.

Key Elements of a Privacy Policy

A robust privacy policy must go beyond mere legal formality; it should accurately reflect the organisation’s real-world data practices. In the Indian context, following the enactment of the Digital Personal Data Protection Act, 2023 (DPDPA), there is an increased emphasis on transparency, informed consent, and accountability in the handling of personal data. However, the law does not prescribe a one-size-fits-all template. This raises a practical question: what should a well-crafted privacy policy include?

It usually depends on a few core principles: what data is collected, why it’s collected, how long it stays in the system, and what users can do about it. Let’s break it down.

1. What Type of Data Is Collected?

Many businesses today collect a broad range of personal data beyond just names and email addresses. Depending on the nature of the platform or service, this may include phone numbers, Permanent Account Numbers (PAN), Aadhaar numbers, banking information, geolocation data, and IP address logs. For example:

Names, phone numbers, and email IDs from contact forms or signups;
Transaction or billing info during purchases or subscriptions;
Device data (browser type, device model) and browsing activity;
Government-issued IDs (especially for financial services or KYC-based platforms).

The policy should mention if the data is taken directly (like when the user fills a form) or indirectly (like via cookies or plugins).

2. Why Is the Data Being Used?

This is often the point at which many privacy policies become ambiguous; however, current Indian data protection laws increasingly mandate transparency and specificity. The business must spell out the purpose:

Service delivery (e.g. creating a user account or processing orders)
Customer support and feedback
Legal compliance (tax, law enforcement requests)
Marketing (if user has agreed to that use)
Analytics or improving features

Any purpose not mentioned here might cause future trouble.

3. How Consent Is Taken (and Withdrawn)

Under the DPDPA, everything rests on consent. So, businesses need to mention:

When is the user asked for consent (before signup, before processing)?
What’s the mechanism, tick-box, click-wrap, etc.?
Can users say no to marketing but still use the product?
What if they change their mind? Can they revoke consent?

Most importantly, the terms must be explained in simple language that a user can understand.

4. Who Has Access to the Data?

If the data is going to third-party vendors, like analytics platforms, cloud storage providers, or payment processors, it must be mentioned in the policy. Common examples include:

Sharing with payment gateways such as Razorpay, Stripe, or Paytm;
Hosting data on AWS, Azure, or Indian cloud providers;
Integrating third-party analytics tools or marketing CRMs.

If the data is being stored or accessed outside India, that also must be stated.

5. How Long Will the Data Be Kept?

Under the DPDP Act, no specific limit has been mentioned for storing the data, but keeping data forever isn’t advisable. The policy should say:

What criteria decide retention duration (e.g., inactive accounts, legal limits)
When does deletion happen, on request or automatically?
Whether user data is anonymized or permanently deleted

6. What Are the User’s Rights?

The privacy policy must clearly outline the rights that users are entitled to under the privacy policy:

Right to Access Information – Know what personal data is collected and how it’s used.
Right to Correction – Request correction of inaccurate or outdated personal data.
Right to Erasure – Ask for deletion of personal data no longer necessary or if consent is withdrawn.
Right to Consent & Withdrawal – Give or withdraw consent for data processing at any time.
Right to Grievance Redressal – Lodge complaints with the data fiduciary and escalate to the Data Protection Board if unresolved.
Right to Nominate – Appoint someone to exercise your rights in case of death or incapacity.

Terms & Conditions: Key Legal Inclusions Explained

Understanding the Core of Terms & Conditions

For any business offering online services—whether e-commerce, SaaS, or content-driven platforms—the Terms & Conditions serve as a binding legal contract that governs user interaction with the platform. Unlike privacy policies, which focus on the handling of personal data, Terms & Conditions define user conduct, rights and obligations, limitations of liability, and mechanisms for dispute resolution. Under Indian contract law, when properly drafted and implemented—particularly through clickwrap mechanisms or affirmative checkbox acceptance—these terms are fully enforceable.

Let’s now examine the key components that form the foundation of an effective Terms & Conditions document.

Definitions, Consent, and Eligibility

At the beginning, a well-drafted terms and conditions document should clarify:

What the “Platform”, “Service”, “User”, or “Content” actually means. This helps avoid confusion later on.
Whether the user is required to be 18+ or legally competent.
That accessing or continuing to use the service amounts to binding acceptance.

If the site uses cookies, integrates log-in from other platforms, or includes embedded third-party tools, those should also be disclosed briefly or referenced.

User Responsibilities and Platform Rules

The terms and conditions should mention:

Users are responsible for safeguarding login credentials.
They must not post or transmit content that’s unlawful, abusive, defamatory, or in breach of third-party rights.
That use of bots, scrapers, or similar automated tools is not permitted unless expressly allowed.

This part not only strengthens internal control but is also crucial if a platform ever needs to take down content or block a user for violation.

Content Rights and Intellectual Property

A mistake some platforms make is being vague about IP ownership. The terms and conditions should address:

Whether content uploaded by users remains their own, or is licensed to the platform (and to what extent).
That all platform branding, logos, UI design, and underlying code are protected under copyright or trademark law.
Whether users are allowed to reproduce or share platform content, and under what license.

Limiting Liability and Allocating Risk

One of the most essential and pragmatic clauses in the Terms & Conditions is the Limitation of Liability clause. This is where the platform tries to shield itself from:

Losses or damages caused by service outages or bugs.
Claims arising from content submitted by users or third-party vendors.
Any indirect, incidental, or consequential damages (such as lost revenue or data).

A well-drafted indemnity clause here can ensure that the user bears responsibility for legal claims arising out of their actions.

Governing Law, Jurisdiction, and Disputes

Finally, the enforcement angle. This part of the terms and conditions should identify:

The applicable law, typically Indian law.
Whether disputes will go to court or arbitration.
The location of dispute resolution and any specific arbitration rules that will apply (like the Arbitration and Conciliation Act, 1996, or ICA rules).

Key Differences Between Privacy Policy and Terms & Conditions

The difference between privacy policy and terms & conditions isn’t just academic; these are two distinct documents that serve very different legal purposes. Let’s break down these differences through five practical lenses:

Purpose and Scope

A privacy policy is primarily focused on informing users how their personal information is collected, processed, stored, and shared. It’s about transparency. This document is mandated by law in India under frameworks like the IT Rules, 2011, and the upcoming DPDPA.

On the other hand, terms and conditions (also called terms of use or service agreements) define the legal relationship between the user and the platform. It sets out rules for usage, limitations of liability, dispute mechanisms, and ownership of content. It is a binding contract if accepted.

So:

Privacy policies deal with “what data is collected and how.”
Terms & conditions deal with “what users can and cannot do.”

Legal Enforceability

Here’s a subtle but crucial difference: While a privacy policy is a legal requirement, it’s not always a contract enforceable against the user. Its primary function is to satisfy compliance obligations and reduce exposure under data protection laws.

In contrast, terms and conditions operate like a private contract. If a user violates the terms, say, by scraping the site, or using it for unlawful purposes, or infringing on IP, then the platform can take legal action based on breach of contract. This is especially valid when the user’s consent is obtained through a specific mechanism, such as a checkbox or button acceptance.

Mandatory vs. Discretionary Nature

In India, under Section 43A of the IT Act and Rules 4 & 5 of the SPDI Rules, 2011, having a privacy policy is mandatory for any business or intermediary that handles sensitive personal data.

However, terms and conditions are not mandatory. Yet, they are strongly recommended, especially for commercial digital businesses. Without terms, a platform might find it hard to limit liability or take action against misuse.

Regulatory Requirements vs. Contractual Framework

Privacy policies are regulatory; they must conform to government guidelines and should ideally be updated in line with new frameworks like the Digital Personal Data Protection Act (DPDPA) 2023.

Terms & conditions are internal legal instruments that reflect business practices, risk appetite, and commercial structure. The business can draft and modify them as they see fit, so long as they’re reasonable and legally sound.

Comparative Table of Differences

Feature	Privacy Policy	Terms & Conditions
Focus Area	Personal data collection and use	Legal usage terms, rules, and liabilities
Legal Requirement	Mandatory for platforms collecting user data	Optional, but critical for business protection
Nature	Compliance document	Contractual agreement
Consent Mechanism	Implied or explicit (depending on sensitivity)	Typically requires user acceptance (clickwrap)
Governs	Data privacy obligations	User behavior, platform rights, dispute resolution
Regulated By	IT Act, SPDI Rules, DPDPA	Indian Contract Act, platform-specific rules

When and Where to Use Each Document

Proper deployment of both documents, Privacy Policy and Terms & Conditions—at the right touchpoints and in an appropriate structure is not merely advisable; it is a legal requirement. Though they serve distinct purposes, these instruments must operate in tandem across your platform’s user interface to ensure both compliance and user clarity.

Placement on Website or App

A privacy policy is typically linked in the footer of every webpage and app screen. It should also appear at every point where personal data is collected, during signup, newsletter opt-in, order checkout, etc.

Terms and conditions, however, should appear in places where user action equates to agreement. For example:

Before account creation.
Before accessing paid services.
During checkout or usage of core features.

The user must be made to read and accept them, preferably through a clear checkbox with linked content.

Importance of Consent and Acceptance Mechanism

For a privacy policy, implied consent may be enough for general data, but explicit opt-in is needed for sensitive personal data (like financial or health information).
For terms & conditions, platforms must actively secure user consent. This creates a record and reduces arguments later about whether the user “knew” the rules.

Without proper acceptance mechanisms, the terms and conditions become toothless, even if legally sound.

Tailoring Clauses to Business Type (e-commerce, SaaS, finance, etc.)

Every business sector has its nuances:

E-commerce platforms should focus their terms and conditions on delivery, returns, payment gateway integration, and customer disputes.
SaaS companies must include license rights, uptime SLAs, limitation of liability, and data ownership.
Fintech platforms must deal with RBI regulations, payment gateway compliance, and clauses protecting them from fraud-related liability.

At the same time, the privacy policy must reflect how data flows across systems. For instance, a fintech app collecting Aadhaar or PAN must comply with sector-specific data localization rules.

Drafting Tips for Indian Businesses

Legal documents such as Privacy Policies and Terms & Conditions must not be treated as boilerplate, particularly in the Indian context, where regulatory scrutiny, consumer awareness, and litigation risks are on the rise. Reliance on poorly drafted clauses, outdated consent mechanisms, or generic foreign templates can leave a business exposed to significant legal and reputational consequences.

Below are practical and drafting suggestions for Indian platforms and businesses.

Legal Vetting and Review

Overlooking legal review early often leads businesses to adopt unsuitable, foreign policy templates. The legal review and vetting matters since:

It aligns your document with Indian laws like the Information Technology Act, SPDI Rules, and DPDPA 2023.
It helps avoid contradictions with other internal documents, like vendor contracts, platform disclaimers, or refund policies.
It pre-empts regulatory issues by identifying unlawful or unenforceable clauses.

A proper terms and conditions agreement should also contain clauses specific to Indian law, such as governing law and jurisdiction (like “Courts of Mumbai”), arbitration mechanisms (per Indian Arbitration Act), and specific disclaimers needed under Indian consumer law.

Ensuring Clarity and Simplicity for Users

Just being legally correct is not enough. The privacy policy must also be understandable. Tips to ensure clarity:

Break content into short paragraphs.
Use bullet lists for key user rights.
Add definitions at the top (e.g., what qualifies as “personal data” or “processing”).
Avoid dense passive constructions (“Data shall be collected only upon…”) and use simple language instead (“We collect data when…”)

The difference between privacy policy and terms & conditions must also be made clear, especially when displayed in sign-up forms or footers. Users must know which document governs which set of responsibilities.

Keeping Policies Updated and Compliant with New Laws

Many Indian businesses draft these documents once and then forget them. That’s a major risk.

Here’s what you should do:

Conduct a legal review every 6–12 months.
Update the privacy policy every time your platform collects a new data point or uses a new analytics tool.
Include a “Last Updated On” date and revision history at the bottom of the document.
Proactively include provisions aligned with upcoming frameworks like the Digital Personal Data Protection Act (DPDPA).

Indian regulators now expect data controllers to be proactive. With the RBI tightening data security for fintechs and MeitY tracking intermediary compliance, businesses can no longer ignore regular policy reviews.

Using Templates vs. Custom Drafting: What to Avoid

There are hundreds of privacy policy generators and terms & conditions templates floating around online. But these are often tailored for US law, GDPR, or other international frameworks. Copying them could violate Indian laws or create blind spots.

Avoid:

Policies that refer only to GDPR or CCPA with no mention of Indian laws.
Vague or ambiguous liability disclaimers (“we are not responsible for anything…”) that authorities may strike down as unfair.
Missing opt-in clauses for sensitive personal data like Aadhaar, bank details, or medical history.

Instead, adopt a hybrid approach:

Use internal templates only as a starting point.
Customize every section to your actual business model, sector, and jurisdiction.
Run a legal and compliance audit of the draft before it goes live.

Conclusion – Privacy Policy vs. Terms & Conditions

In today’s digital landscape, businesses must treat their legal documents as strategic essentials, not afterthoughts. With rising enforcement under the Digital Personal Data Protection Act, growing consumer awareness, and increasing judicial scrutiny, vague or poorly drafted Privacy Policies and Terms & Conditions can expose businesses to avoidable legal risks.

Many businesses underestimate the distinction between a Privacy Policy and Terms & Conditions. This difference has direct implications for legal risk, user trust, regulatory perception, and even the likelihood of strategic partnerships or acquisitions. While the Privacy Policy addresses how personal data is handled and helps mitigate data misuse claims, the Terms & Conditions define user conduct, protect the business model, and limit liability in case of disputes. These documents, when drafted in a legally compliant manner, don’t just reduce legal risk; they build business credibility. In future investments, due diligence, or onboarding large clients, investors, and partners often ask to review these policies. If your privacy policy or terms haven’t been reviewed recently, it’s time for a legal audit, before a authority points out the gaps.

About Us

Corrida Legal is a boutique corporate & employment law firm serving as a strategic partner to businesses by helping them navigate transactions, fundraising-investor readiness, operational contracts, workforce management, data privacy, and disputes. The firm provides specialized and end-to-end corporate & employment law solutions, thereby eliminating the need for multiple law firm engagements. We are actively working on transactional drafting & advisory, operational & employment-related contracts, POSH, HR & data privacy-related compliances and audits, India-entry strategy & incorporation, statutory and labour law-related licenses, and registrations, and we defend our clients before all Indian courts to ensure seamless operations.

We keep our client’s future-ready by ensuring compliance with the upcoming Indian Labour codes on Wages, Industrial Relations, Social Security, Occupational Safety, Health, and Working Conditions – and the Digital Personal Data Protection Act, 2023. With offices across India including Gurgaon, Mumbai and Delhi coupled with global partnerships with international law firms in Dubai, Singapore, the United Kingdom, and the USA, we are the preferred law firm for India entry and international business setups. Reach out to us on LinkedIn or contact us at contact@corridalegal.com/+91-9211410147 in case you require any legal assistance. Visit our publications page for detailed articles on contemporary legal issues and updates.