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 the “vendor,” and the software buyer is the “licensee” because the EULA gives them a license to use the software. This agreement is useful when the vendor wants to outline the permissions and restrictions on using licensed software.
EULA vs. Terms and Conditions
The difference between an end-user license agreement (EULA) and a terms and conditions agreement is their scope.
An EULA details what users can and cannot do with a software product. In contrast to an EULA, a Terms and Conditions agreement is broader and covers more than merely software licensing, as you can use it to emphasize the stipulations of any product or service offering.
When an End-User License Agreement Is Needed
An EULA is commonly used when an individual or company creates proprietary software and wants to make money by allowing others to use the program in limited ways. If the licensor worries about their copyright, an EULA prevents others from copying the source code, selling the software, or transferring it to a non-paying user.
If you have created one of the following, you may benefit from creating an EULA for your users to agree to before using your software:
- Websites
- Mobile apps
- Software applications
- Computer programs
Consequences of Not Using an End-User License Agreement
Without an EULA, a user can modify, adapt, improve, enhance, translate, or perform some other derivative of the original licensed software. These actions may result in stolen ideas or lost money for the original software publisher.
Benefits of using an EULA:
- Maintain control over the distribution and use of software
- Limit your liability for damages
- Terminate user accounts
- Restrict what users can do with your software
What to Include in an End-User License Agreement
A simple end-user license agreement will identify the following essential elements:
- Permitted and restricted use guidelines
- Disclaimer of warranties
- Governing laws
- Licensor’s and licensee’s names and addresses
- Limitations of liability
- Infringement acknowledgment
- Maintenance and support
- Privacy policy
- Termination
