You would have to create a new file in the root of the install and edit the header.php and add a link to it in the menu (near the bottom of the file). The file could be a regular HTML file but if you want it to have the same header and footer as the rest of the site you could make it a php file and include the header and footer files.
I’ll try to show some example code here but not sure how well it will display on these forums.
<?php require_once('html/header.php'); ?> <h2>Terms and Conditions</h2> Your terms and conditions. <?php require_once('html/footer.php'); ?>