EULA agreements are typically presented to users for acceptance during the installation or set-up stage of the software. A pop-up window that prompts a user to check a box that shows they accept the terms before continuing is a very common and effective way of obtaining acceptance for legal terms.
The terms of an EULA define the scope of how the software can be used, and any rights the buyer of the software application may have.
Liability of limitation clauses can also be included, to disclose that if the software app damages the equipment or any data of the user, the licensor or provider of the software cannot be held liable for the damages.
An EULA is important for software developers because when someone installs, downloads, or uses a copy of your software application on their computer or mobile device, they are, in essence, making a copy of the copyrighted software. This legal agreement will dictate limits and liabilities that come along with personally using this copyrighted software.
Generally speaking, a Terms and Conditions agreement cover far more topics and are much broader in scope. The End-User License agreement, however, gives users the right to use the software and only covers issues that address the licensing of the software.
This kind of end-user license agreement typically pops up when a user first opens an app or begins to install an app or software program. This early and initial presentation of the agreement happens because, in order for a user to use the app via a license, the user must acknowledge that she/he is using the app through a license and that certain limitations come with such use in order to respect the copyright of the software.
Conversely, the Terms and Conditions is more in depth and detailed and lets users know how they are allowed to use the app, and what they should expect from you.
The Terms and Conditions will be broken down into multiple sections addressing issues such as fees and costs, dispute resolution in the event a legal dispute arises from either party and information on prohibited behavior and issues of privacy and personal information.
2. Common clauses for EULA
There are a few clauses that should be included in every EULA.
These clauses address license granting, restrictions on use, infringement information, termination of licensing, and disclaimers and limitations of warranties and liability.
As mentioned, the primary purpose of an EULA is to grant a license of use for an app to an end user. Because of this, every end-user license agreements should have a section that explicitly states that a license is being granted.
Below is an example of a clause in an EULA that covers license granting. Note how it makes it clear that the license is "revocable, non-exclusive, non-transferable, limited..." These limitations let a user know that while they are able to use the software or app, she cannot necessarily use it in whatever way she wants.
The EULA agreement of Vimeo includes a license limiting clause that lets users know that they must also adhere to the Terms of Service of Apple App Store if they use Vimeo's iOS app:
Restrictions on Use
Since a user can use the app in various ways (illegal or legal), a section spelling out restrictions on the use of the license is another key part of an EULA.
Because Vimeo has a copyright agreement in place, the license granted to a user is limited in that no "modification, adaptation, improvement, enhancement, translation or derivative work" may be done to the app by the user, and that a user cannot "decompile, reverse engineer, disassemble, attempt to derive the source code of, or decrypt the Application."
Clauses like this go on to limit competition, solicitation and protect proprietary traits of the app. Because your software app will most likely also have copyrights and intellectual property rights, you should include a "Restriction of Use" clause similar to the one above so that you can legally limit what kind of actions others can take with or to your software application.
Remember: A user may be granted a license, but not one without restriction.
If you have other legal agreements that include restrictions on how your app can be used, it's a good idea to place links to all of the agreements close to your license agreement information since each legal agreement may relate to the next.
Because most EULA agreements deal prominently with copyright issues, there must be a section that deals with what will happen in the event of infringement upon this copyright.
This section can be brief, such as the example below, so long as it includes broad but specific language that makes it clear that if the infringement takes place, the user will be held responsible for legal issues arising from the infringement.
Termination of Licensing
It's important for the software developer to the keep rights to terminate the license in the event of violations of use or other issues. These clauses tend to be absolute and grant very strong rights to the provider or licensor of the app rather than the end user.
For example, the clause below allows the company to "in its sole and absolute discretion, at any time and for any or no reason, suspend or terminate this License and the rights afforded..."
Limitations of Warranties
A very important clause in any EULA is a disclaimer of warranties.
This section is where it's made known that the licensor or provider of the app is made available "as is" and that if an end user is not happy with the software or app, the licensor or provider is not responsible for improving the software or app to satisfy the end user.
A common practice is to simply disclaim all warranties that are able to legally be disclaimed.
The example below is from the EULA of Vimeo and shows a very short, simple, and effective way of addressing disclaimers of warranty:
Limitations of Liability
This kind of clause, commonly called "Limitations of Liability", makes it clear that the provider or licensor will not be held responsible for any damages that arise out of the use of the app.
For example, if a user installs a mobile app and agrees to an EULA with this clause in it, then the user's phone malfunctions and breaks, the user cannot seek liability against the provider of the mobile app for reparations for the damaged phone, even if the damage was a result of the mobile app.
An effective and thorough EULA will ensure that anyone who uses your desktop or mobile app will be aware that the rights of the user only go so far and that you still maintain control over the software and who uses it.
You can protect yourself and your business by including the above clauses in an EULA and making sure your users are presented with it before installing or downloading your desktop or mobile app.