Key Takeaways

  • A EULA license agreement defines how software can be used, emphasizing user restrictions, ownership, and liability.
  • It differs from general software license agreements, which are broader and often business-oriented.
  • EULAs are binding in many jurisdictions and typically enforced when users accept terms through click-wrap or browse-wrap mechanisms.
  • Mobile apps often include both a EULA and terms of use to address copyright and behavioral expectations.
  • Developers should consider whether to use a EULA, terms of use, or both depending on how the software interacts with users and platforms.

An end user license agreement, or EULA, (often referred to as a software license) is a contract that exists between the licensor of a piece of software and the buyer, which spells out the buyer’s rights to the use of software. It provides the buyer rights to the use of the software, provided that it is used in accordance with the licensors specifications. Today, it is customary for software to be downloaded from the internet, so the EULA is generally an online document that the user reads and then clicks on a box to accept the terms, as opposed to the days in which software was purchased in physical form and installed manually. This generally required the agreement to be mailed into the licensor after purchase. The latter is referred to as a click-wrap license, while the former is considered a shrink-wrap license.

Things to Consider

It is worth noting that end user license agreements are not legally binding. Rather, it is simply an agreement between the licensor and the buyer that the software will be used in the manner set forth by the licensor. Additionally, a EULA does not protect the buyer against fraud, as it is not intended to be a warranty, but rather it is designed to protect the licensor against issues of copyright infringement, such as making copies of the software.

Additionally, software purchasers should be aware that the licensor maintains ownership of the license; generally, the buyer is actually renting or leasing the software. Particularly in cases of software that is downloaded from the internet, the licensor may have access to any and all data that is entered using their software. This means that the vendor can potentially read it, share or sell it, at any time.

Key Clauses in a EULA License Agreement

A well-drafted EULA license agreement typically includes several key clauses that protect the software developer while informing the end user of their rights and obligations. These may include:

  • License Grant: Specifies whether the license is exclusive or non-exclusive, and whether it's perpetual, revocable, or time-limited.
  • Restrictions on Use: Prohibits reverse engineering, copying, sublicensing, or transferring the software.
  • Ownership: Clarifies that the developer retains ownership of the software, including all intellectual property rights.
  • Termination Clause: Describes conditions under which the agreement can be terminated, often immediately upon violation.
  • Disclaimer of Warranties: States that the software is provided “as is,” without guarantees of performance.
  • Limitation of Liability: Limits the developer’s responsibility for damages resulting from use or misuse of the software.
  • Governing Law: Specifies the jurisdiction whose laws will govern the agreement.

These clauses help mitigate risk, limit liability, and ensure compliance by the end user.

Click-wrap License

As click-wrap licenses are the most commonplace these days, it is important to note that if, for some reason, you should choose to not accept the terms and conditions of the contract, the licensor will not complete the download of the software. This method of EULA obviously removes any possibility of negotiating the terms and conditions.

Browse-wrap vs. Click-wrap vs. Scroll-wrap Agreements

There are multiple ways EULAs are presented to users, each with different legal implications:

  • Click-wrap: Requires users to actively click “I agree” before proceeding, making it one of the most enforceable methods.
  • Browse-wrap: Does not require user acknowledgment; the agreement is usually linked in a footer. Enforcement is weaker unless the user had actual or constructive knowledge of the terms.
  • Scroll-wrap: Users must scroll through the entire agreement before clicking to accept. This provides additional assurance that the user has at least viewed the full content.

Courts generally view click-wrap and scroll-wrap agreements as more enforceable than browse-wrap, especially when users are explicitly required to accept the terms.

Terms of Use for a Mobile App

As we are all doing more and more on our cell phones, and much of the same products can now be downloaded from app stores, it raises the question as to the difference between an end user license agreement and the terms of use for a mobile app. (Which, we have all seen and agreed to, at various points.)

Generally, while a EULA is really only concerned with issues of copyrights and proper use of the software, the terms of use may place further restrictions on the user, regarding behavior. For example, many dating apps have language in their terms of use regarding the use of abusive or otherwise inappropriate language. Should a user be reported, the app may reserve the right to freeze or cancel that users account. FaceBook has policies in place in their terms of use regarding posting content that is abusive or violent and reserves the right to remove that content, when reported.

EULA vs. Software License Agreement: What's the Difference?

While the terms “EULA” and “software license agreement” are often used interchangeably, they serve slightly different purposes:

  • EULA License Agreement: Typically targets individual users and governs end-use rights for software installed on a personal device.
  • Software License Agreement (SLA): Broader in scope, often used in B2B contexts, and may include enterprise-level provisions like maintenance, updates, service levels, and support.

An SLA may include a EULA as an exhibit or annex, especially when software is being deployed across both enterprise and end-user environments. Developers must assess the context of use—consumer vs. business—when deciding which type of agreement is more appropriate.

Which One to Use

If you are a software or app developer, you may have questions regarding which one, an end user license agreement or terms of use for a mobile app, is the best one for your company to use.

  • If your program is one in which users engage with one another, you may want to consider the terms of use, as you can address acceptable versus unacceptable behavior.
  • Both can provide language regarding making unauthorized copies of your program.
  • If your program is one that is designed to communicate with a server (like a social media app, as opposed to possibly a word processing program), then you should consider utilizing the terms of use.
  • If you have designed a mobile app, where will it be sold? If it’s an Apple app, the App Store provides terms of use agreements for those vendors that do not have one created specifically for them. Google, however, does not. If you hoping to have your app available across all mobile platforms, you are better drafting your own terms of use to be used with all of them.

Some companies choose to create both a terms of use and an end user license agreement. Should you not want to deal with creating two separate documents, as well-written terms of use agreement that includes language regarding copyrights and trademarks, should meet your needs.

Best Practices for Drafting a EULA License Agreement

When drafting a EULA license agreement, consider the following best practices to ensure enforceability and clarity:

  • Use Plain Language: Avoid overly legalistic or technical terms that users might not understand.
  • Make Terms Visible: Don’t bury the agreement in hard-to-find links. Use prominent presentation formats (e.g., click-wrap).
  • Customize for Your Product: Don’t rely on generic templates—tailor the EULA to your software’s specific functions and risks.
  • Include Updates Clause: Reserve the right to update the EULA and inform users of changes.
  • Ensure Jurisdiction Compliance: Make sure your EULA complies with consumer protection laws in your target markets, including GDPR, CCPA, and others where applicable.

These strategies help improve user understanding, reduce disputes, and increase legal enforceability.

Frequently Asked Questions

  1. Is a EULA license agreement legally enforceable?
    Yes, when properly presented and accepted (e.g., via click-wrap), EULAs are generally enforceable in many jurisdictions.
  2. What is the difference between a EULA and a software license agreement?
    A EULA targets individual end users, while a software license agreement may be broader and apply to business-to-business arrangements.
  3. Can I modify a EULA after users have already accepted it?
    You can, but best practice is to include a clause in the original EULA that reserves the right to update terms and notify users.
  4. Do I need both a EULA and Terms of Use?
    If your software enables user interaction or is hosted on a platform (e.g., mobile app), having both documents is often beneficial.
  5. What happens if a user violates the EULA?
    Violating a EULA can result in termination of access, legal action, or claims for damages, depending on the severity and terms of the agreement.

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