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What is an End User License Agreement (EULA)?
An End User License Agreement (EULA) is a legal contract between the manufacturer and/or author and the end user of an application. More specifically, it’s a contract between a licensor of a product and a licensee. This license agreement is used for most software. As software is a form of intellectual property (IP), a EULA encourages further developments by protecting the IP rights of software creators. Among other software-specific things, it normally specifies:
- What users can and cannot do with the software
- The conditions under which a user’s access might be limited or terminated
- That the buyer is receiving a non-transferable, non-exclusive, revocable license with their software purchase
- That the program cannot be redistributed for profit but may be used by the customer
A EULA typically appears before a user installs software but after purchase. In order to complete the installation, a window pops up with multiple screens of dense text. The user must scroll to the bottom of each page and click the “I Agree” button. These EULAs are sometimes referred to as shrinkwrap or click-through agreements, as these names refer to the inability for a customer to sufficiently review the license agreement before purchasing the software.
Writing a EULA
A EULA should be clear and detailed so the customer is aware of their rights. When writing a EULA:
- Clearly identify the business
- Clearly state the rules of user behavior and access to the software
- Disclose the copyright license that applies, such as open source
- Include other details of the license, including conditions for termination
- Include any disclaimers and limitation of liability statements
EULA vs. TOS vs. SLA
A Terms of Service (TOS) agreement, also known as terms and conditions, is a contract between a company and user that defines the rules by which a user must abide by in order to use a service. A Service-Level Agreement (SLA) is a contract between a service provider and the end user which stipulates and commits the service provider to a required level of service. It is similar to a customer service policy for a software service.
A EULA is typically applied to a single-sale, nonsubscription product such as a video game. A TOS agreement is applicable when a company, such as an application provider, is offering a service and does not go into as much detail as an SLA. An SLA is used when a company is offering a service that a customer needs to be reliable, supported, and consistent, such as an internet service provider. It’s common to have both a TOS agreement and SLA.