First and foremost, the rules you specify in your Terms and Conditions agreement can help you protect your business by making sure there isn't any form of uncertainty or confusion between you and your customers. They allow both parties of the agreement to understand their rights and responsibilities.
In addition to this, a Terms and Conditions agreement gives you the opportunity to declare which content belongs to you.
For instance, as the owner of a web application, you would want to state that the site's branding elements, design, content, and web application software belong to you and are protected by copyright law.
Another reason a Terms of Conditions agreement is useful is that it lets you legally limit your liability in cases where, for example, your content isn't accurate or your services become unavailable.
The purpose of this clause is to let your customers know that you cannot be held responsible in case of any potential liability issues pertaining to the customer's privacy, auto-renewal of subscription fees, unauthorized screen/data scraping or other mishaps.
Suppose you run an online store for a business that's registered in California but caters to a global audience. If a customer in the United Kingdom wants to file a lawsuit against you, would the laws of the United Kingdom apply or would the laws of the United States and the laws of the State of California be applicable?
Including a governing law clause in your Terms and Conditions agreement clearly states which laws will apply in the event of any legal disputes.
Some companies - especially those with more geographic reach - define multiple governing laws for users based in different locations. This is incredibly important and, therefore, should be carefully considered because one country's law is often considerably different from another's.