An End-user License Agreement (EULA) is a contract between a software developer and a user who wants to purchase and use that software.
The software developer is known as the “vendor”, and the buyer of the software is known as the “licensee” because the EULA gives them a license to use the software.
1. What is an End User License Agreement?
An End User License Agreement is a contract between two parties — the licensor and the licensee — for the right to use proprietary software. The licensor or vendor is often an individual or software company who created the software. The licensee is the user who pays a fee to use, download, or install a copy of the software.
An End User License Agreement is often known by its abbreviated form EULA. If you’ve ever downloaded an app on your phone, you’re likely familiar with those four little letters.
An EULA protects the licensor or copyright owner of the software by prohibiting the licensee from re-selling the software for their own personal gains at your expense. A license essentially gives the user “permission” or a limited right to use the software.
A simple End User License Agreement will identify the following basic elements:
- Disclaimer of Warranties: the software is often provided “as is” and the licensor is not responsible for any problems that may arise from using the software
- Governing Law: which state’s laws will apply if there is a dispute or problem
- Infringement Acknowledgement: the user is responsible for any legal issues related to copyright infringement
- Licensor: name and address of the individual or company who created the software
- Licensee: name and address of the user who wants to install or download the software
- License Granting: limitations on how the software can be used by the licensee
- Limitations of Liability: whether the licensor will be responsible for any damages or problems that arise from using the software
- Maintenance and Support: whether the user will be provided support on site or by phone, either 24 hours 7 days per week, quarterly, or annually
- Software: name or title of the computer software program created and now licensed
- Termination: whether the software developer has the right to end the license if the user violates the agreement or other issues arise
- Use Restrictions: the licensee is limited in how they can legally or illegally use the software
In contrast to an EULA, a Terms and Conditions agreement is broader and covers more issues than merely the licensing of the software.
As a reference, an End User License Agreement is known by other names:
- Browse Wrap Agreement
- Click-Wrap License
- End-Use License Agreement
- License Agreement
- Licensed Application End-User Agreement
- Shrink-Wrap License
- Software License Agreement
The courts are mixed about whether “browsewrap” agreements are legally enforceable since some provisions have been declared unconscionable or unacceptable. Knowing the difference between browsewrap and clickwrap agreements can help you better understand which fits the needs of your own business.
Every EULA should clearly state that a revocable, non-exclusive, non-transferable, limited license is being granted to the user. In other words, the software can be used but not re-sold.
2. When an End User License Agreement is Needed
An End User License Agreement is commonly used when an individual or company creates proprietary software and would like to make money by allowing others to use the program in limited ways. If the licensor is worried about their copyright, a EULA prevents others from copying the source code, selling the software as their own, or transferring the software to a non-paying user.
3. Consequences of Not Using an End User License Agreement
Without an End User License Agreement, a software publisher is in many ways agreeing to a free and open-source software license. In these copyleft situations, all future versions of the software must continue to be distributed for free.
Instead, if the individual or company who created the software wants to earn money, a EULA protects their source code and specially written program, mobile app, or website from being copied or used without permission. An NDA can act as another layer of protection.
An EULA allows the vendor to restrict the user from modifying, adapting, improving, enhancing, translating, or making derivative works from the original software being licensed.
4. Common Uses of an End User License Agreement
If you have created one of the following, you may benefit from creating a license agreement for your users to agree to before using your software:
- mobile apps
- software applications
- computer programs
5. What to Include in an End User License Agreement
A simple End User License Agreement should generally have at least the following:
- Who created the software program (i.e. licensor) and who wants to use it (i.e. licensee)
- What software program is being licensed and subject to the EULA
- Where disputes will be resolved if there is a problem with the software or agreement
- When the user becomes bound to the terms of the license, either upon opening the package seal, registration, installation, or acceptance of the EULA
- How the software can be used and any rights the user has to the software application
- Whether the licensee can install the software on more than one computer (i.e. site license)
Read about some considerations you should make to ensure your EULA is fair to users.
6. End User License Agreement (EULA) Sample
Here’s what a typical end user license agreement looks like:
End User License Agreement
|State of ______________|
|END USER LICENSE AGREEMENT|
This End-User License Agreement (this “EULA”) is a legal agreement between (Check one) ☐ you
☐ ________________________ [Individual’s name] (“Licensee”) and ___________________________
______________________ [Company name] (“Licensor”), the author of __________________________ ________________________ [Software name] including all HTML files, XML files, Java files, graphics files, animation files, data files, technology, development tools, scripts and programs, both in object code and source code (the “Software”), the deliverables provided pursuant to this EULA, which may include associated media, printed materials, and “online” or electronic documentation.
By installing, copying, or otherwise using the Software, Licensee agrees to be bound by the terms and conditions set forth in this EULA. If Licensee does not agree to the terms and conditions set forth in this EULA, then Licensee may not download, install, or use the Software.
- Grant of License
- A) Scope of License. Subject to the terms of this EULA, Licensor hereby grants to Licensee a royalty-free, non-exclusive license to possess and to use a copy of the Software.
- B) Installation and Use. (Check one)
☐ Licensee can NOT make back-up copies of the Software. Licensee may install and use
(Check one) ☐ an unlimited number of ☐ a maximum of __________ copies of the Software solely for Licensee’s (Check one) ☐ business and personal use ☐ business use ☐ personal use.
☐ Licensee can make back-up copies of the Software. Licensee may install and use
(Check one) ☐ an unlimited number of ☐ a maximum of __________ copies of the Software and make multiple back-up copies of the Software, solely for Licensee’s (Check one) ☐ business and personal use ☐ business use ☐ personal use.
- C) Reproduction and Distribution. (Check one)
☐ Not applicable
☐ Licensee may reproduce and distribute (Check one) ☐ an unlimited number of ☐ a maximum number of __________ copies of the Software, provided each copy shall be a true and complete copy, including all intellectual property notices, and shall be accompanied by a copy of this EULA. Licensee is not allowed to charge for distributing the Software, either for profit or to recover media and distribution costs.
Standalone distribution (Check one)
☐ Not applicable
☐ Copies of the Software may be distributed as a standalone product or included with your own product, as long as the Software is not sold or included in a product or package that intends to receive benefits through the inclusion of the Software.
- Description of Rights and Limitations
- A) Limitations. Licensee and third parties may not reverse engineer, decompile, or disassemble the Software, except and only to the extent that such activity is expressly permitted by applicable law notwithstanding the limitation.
- B) Update and Maintenance. (Check one)
☐ Not applicable
☐ Licensor shall provide updates and maintenance on the Software: (Check one)
☐ On an as needed basis
☐ Every 6 months
☐ Every year
☐ Other: _____________________________________
- C) Separation of Components. The Software is licensed as a single product. Its components may not be separated for use on more than one computer.
- Title to Software. Licensor represents and warrants that it has the legal right to enter into and perform its obligations under this EULA, and that use by the Licensee of the Software, in accordance with the terms of this EULA, will not infringe upon the intellectual property rights of any third parties.
- Intellectual Property. All now known or hereafter known tangible and intangible rights, title, interest, copyrights and moral rights in and to the Software, including but not limited to all images, photographs, animations, video, audio, music, text, data, computer code, algorithms, and information, are owned by Licensor. The Software is protected by all applicable copyright laws and international treaties.
- Support. (Check one)
☐ Licensor has NO obligation to provide support services for the Software.
☐ Licensor will provide (Check one) ☐ on site ☐ phone support, available (Check one) ☐ 24 hours per day 7 days per week ☐ during normal business hours ☐ other: _________________________________ for a time period of (Check one) ☐ 6 months ☐ 1 year
☐ other: _______________________________.
- Duration. This EULA is (Check one) ☐ perpetual ☐ effective for __________________________ _______________________ [Period of time] or until:
- A) Automatically terminated or suspended if Licensee fails to comply with any of the terms and conditions set forth in this EULA; or
- B) Terminated or suspended by Licensor, with or without cause.
In the event this EULA is terminated, you must cease use of the Software and destroy all copies of the Software.
- Jurisdiction. This EULA shall be deemed to have been made in, and shall be construed pursuant to the laws of the State of _________________, without regard to conflicts of laws provisions thereof. Any legal action or proceeding relating to this EULA shall be brought exclusively in courts located in _________________________ [City], _________________ [State], and each party consents to the jurisdiction thereof. The prevailing party in any action to enforce this EULA shall be entitled to recover costs and expenses including, without limitation, attorneys’ fees. This EULA is made within the exclusive jurisdiction of the United States, and its jurisdiction shall supersede any other jurisdiction of either party’s election.
- Non-Transferable. (Check one)
☐ Not applicable
☐ This EULA is not assignable or transferable by Licensee, and any attempt to do so would be void.
☐ This EULA is not assignable or transferable by Licensee without the prior written consent of Licensor, and any attempt to do so shall be void.
- Severability. No failure to exercise, and no delay in exercising, on the part of either party, any privilege, any power or any rights hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right or power hereunder preclude further exercise of any other right hereunder. If any provision of this EULA shall be adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this EULA shall otherwise remain in full force and effect and enforceable.
- warranty disclaimer. licensor, AND AUTHOR OF THE SOFTWARE, HEREBY EXPRESSLY DISCLAIM ANY WARRANTY FOR THE SOFTWARE. THE SOFTWARE AND ANY RELATED DOCUMENTATION IS PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. LICENSEE ACCEPTS ANY AND ALL RISK ARISING OUT OF USE OR PERFORMANCE OF THE SOFTWARE.
- LIMITATION OF LIABILITY. LICENSOR SHALL NOT BE LIABLE TO LICENSEE, OR ANY OTHER PERSON OR ENTITY CLAIMING THROUGH LICENSEE ANY LOSS OF PROFITS, INCOME, SAVINGS, OR ANY OTHER CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE, DIRECT OR INDIRECT DAMAGE, WHETHER ARISING IN CONTRACT, TORT, WARRANTY, OR OTHERWISE. THESE LIMITATIONS SHALL APPLY REGARDLESS OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. UNDER NO CIRCUMSTANCES SHALL LICENSOR’S AGGREGATE LIABILITY TO LICENSEE, OR ANY OTHER PERSON OR ENTITY CLAIMING THROUGH LICENSEE, EXCEED THE FINANCIAL AMOUNT ACTUALLY PAID BY LICENSEE TO LICENSOR FOR THE SOFTWARE.
- Entire Agreement. This EULA constitutes the entire agreement between Licensor and Licensee and supersedes all prior understandings of Licensor and Licensee, including any prior representation, statement, condition, or warranty with respect to the subject matter of this EULA.
- Additional Provisions and/or Disclosures. ____________________________________________
For additional information regarding this EULA, please contact:
_____________________________ [Company name]