Ever wondered about the legality of End User License Agreements? Are they valid legal contracts? Are they enforceable? Read on for answers to these questions to help you better understand what you’re getting yourself into with a EULA, whether as a software developer, owner or a user. EULA could apply to both software and hardware.
The general rule is that End User License Agreements are not always enforceable. However, there are instances where they are deemed enforceable as seen in the US court decisions in ProCD, Inc. v. Zeidenberg and Feldman v. Google, Inc. (2007). It is important to note that whether or not a EULA is enforceable, it is still a valid contract between the software owner and the user.
Certain reasons have been put forward for making End User License Agreements unenforceable. One is the fact that usually, the terms in the contract are not negotiable, as a user needs to agree to them before they can be granted access. Also, most users never even come in contact with the EULA until after purchase, with no information as to a possible refund if the user rejects the terms. This is why EULAs are also called shrink-wrap agreements or click-through agreements.
Another instance where an EULA will not be enforceable is where the terms are ridiculous or in conflict with prevailing laws of the land. Under German laws, End User License Agreement could be categorized as AGB, meaning general terms and conditions, which are generally valid, but not always enforceable.
In Feldman v. Google, Inc. (2007), the court held that a clickwrap agreement is enforceable where the user had the time to read it and understand it before accepting the terms. Thus, depending on the circumstances, an End User License Agreement could be enforceable or not enforceable. To be enforceable, the user must have been given sufficient time to read and understand the terms, expressly agree to the terms and have the capacity to bind the software or product owner. Where any of these conditions is absent, the EULA will likely not be enforceable.