Last Updated November 16, 2023
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What is an End-User License Agreement (EULA)?
An End-User License Agreement (EULA), also known as a Software License Agreement, is a contract that allows a user to buy the rights to use a computer program, software, or application.
It doesn’t transfer ownership but instead permits the use of the program according to set terms and conditions. This way, an EULA can protect the interests of the software owner, helping them maintain ownership and control over the program and its distribution.
An EULA is often seen as a pop-up when downloading a program or installing an update on your computer. Software programs bought through a retailer or mail order usually come with a physical copy of the license agreement.
Who are the parties to an End User Licence Agreement?
The parties of an EULA are:
- The licensee: The party buying the rights to use the software, also known as the purchaser, buyer, or end-user
- The vendor: The party selling the rights of use for the software, also known as the owner, licensor, or publisher
What’s the purpose of an End-User License Agreement?
An End-User License Agreement legally protects the owners’ intellectual property rights by setting terms for the use of the product. An EULA provides guidelines for the use of the software, limiting users’ ability to copy, modify, and redistribute the program.
An EULA will also restrict users from reverse engineering the product, which helps the owner maintain copyright, preventing and protecting from copyright infringement.
EULAs are unique because they are contracts that can cross borders and be enforceable in other areas. Laws vary by jurisdiction, so vendors should consider how different jurisdictions uphold software license agreements.
LawDepot’s End-User License Agreement template contains a customizable term for governing law. By signing the EULA, users agree to abide by the law and court rulings of the jurisdiction that governs the agreement. This means that by choosing the state where your company is located, you can decide which state law will govern the agreement and the user.
Why should I use an End-User License Agreement?
Use an End-User License Agreement to protect your interests when selling or distributing software, computer programs, or applications.
An EULA can help you to:
- Outline a license instead of a sale. The agreement allows for the use of the software instead of an ownership transfer.
- Prevent abuse of the software. The user can’t sell a copy of the program or use the software inappropriately.
- Disclaim warranties so you aren’t responsible for making improvements to the software.
- Limit your liability, meaning you’ll have no responsibility for any damages if issues stem from your software.
- Terminate use if a user breaks any of the terms.
How do I write an End-User License Agreement?
To write an End-User License Agreement, you will need to include the following:
Include information about the vendor, such as their name and address. In most cases, information about the licensee is not included unless the EULA is physical and accepted upon execution rather than delivery. This could happen if the licensee is a large organization and buys several licenses at once.
2. Details about the license
Describe when the license takes effect and the length of the license term. The license can be perpetual, meaning it never expires, or it can have a set end date, such as a year from acceptance. You will need to specify when the agreement is accepted. This can be:
- When the user accepts and signs the agreement (upon execution)
- When the user opens the package seal
- When the user registers the software, either online or via mail-in confirmation
- When the user installs the software and accepts the digital EULA pop-up
3. Details about the product
Provide details about the product and its use, such as:
- The license fee
- If the license includes the software source code
- The permitted number of installations
- If the vendor offers maintenance and technical support
- If the vendor will issue refunds for non-conforming software
What terms does an End-User License Agreement include?
In addition to the terms previously mentioned, LawDepot’s End-User License Agreement template also addresses the following:
- Limitation of liability: Limits the consequences a vendor might face if issues stem from the use of their software
- Warranties and representations: Clarifies the copyright of the software
- Termination: Outlines the process of ending the contract if the user fails to comply with the terms
- Force Majeure: Limits the vendor’s liability when problems arise from an unforeseen and uncontrollable event, such as if a natural disaster causes the product to malfunction
Sometimes, there are other terms you need to address. You can add additional clauses specific to your product if needed. For example, a vendor might want to add restrictions on the user when selling a product for content creation. The vendor can reserve the right to moderate content that meets certain criteria. In this case, the clause can begin with, “A non-exhaustive list of content that may be rejected by the Software Publisher includes…”
To create your own clauses for an End-User License Agreement, follow these guidelines:
- Use everyday language and complete sentences
- Capitalize any defined terms such as Licensee and Vendor
- Do not use pronouns to refer to parties in the agreement
If you’re unsure how to address a particular use for your End-User License Agreement, contact a local attorney to request advice.
Are End-User License Agreements enforceable?
An End-User License Agreement can be enforced in court if it meets the criteria for a legally binding contract.
If a vendor discovers that a user has violated the agreement, they can send a Cease and Desist Letter to request the behavior stop. In the event of a lawsuit, a copy of a signed or accepted EULA can prove the user’s agreement to abide by the software’s terms and conditions.