If you are reading this through a digital medium, you certainly must have come across an EULA, at least once. An End User License Agreement is a legal document that governs the relations between vendor and user. At the basics, it aims to protect the intellectual property rights of the business and limit potential liability. Previously, we detailed what an EULA is, and analyzed whether or not they were legally binding. For this post, we will highlight the key provisions in an End User License Agreement.
- Type of License: This is usually the first section immediately after the section on the definition of terms. This section contains clauses relating to the kind of license being granted to the end user. It also answers questions about the duration of the license, as to whether it is perpetual or revocable, including its transferability, and conditions precedent in both situations.
- Restrictions: This flows from the type of license granted, as this determines the user’s limitations in relation to the software use. For instance, are users allowed to reverse engineer?
- Compensation: All billing and payment issues are sorted and detailed here. The exact amount due for purchasing the software. Will it be a one-time compensation or a subscription? Are discounts available? What are the modes of compensation?
- Intellectual Property: Does purchase grant users full ownership or just limited access? Are parts of the software source code open source? Where there are no restrictions on creating a derivative work from the source code, there should be a clause on who owns the derivative work.
- Software Updates: Will future updates be billed? How often will there be updates?
- Dispute Resolution: When disputes arise from the End User License Agreement, how and where will they be resolved?
- Warranties, Disclaimers, and Limitations on Liability: as said earlier, the main aim of an EULA is to limit potential liabilities. One way to do this is by disclaiming warranties or grant limited warranties with short durations. A second way to also reduce liability is by capping damages a user can seek if a dispute goes to court.
A comprehensive End User License Agreement contains much more than has been stated above, we have only highlighted the key provisions. Feel free to send us a message if you need an EULA or have one that needs to be reviewed.