Q&A

Question: What is an EULA?

An EULA — or end user licence agreement — is an agreement between the software licensor and the end user. The licensor is the entity who sells the software — often a publisher but it may be a developer if they sell the software direct to market. The end user is the customer who uses the software. Often the customer will be a business who supplies the software to its employees. In these cases, the EULA will apply to both the business and the employees who use the software.

Why Do I Need an EULA?

An EULA will set out the terms of use of your software, including prohibiting copyright infringement and reverse engineering. It is the main document that establishes the terms of use for downloading, installing and using the software. A well-drafted EULA will ensure the terms of the agreement are clear and will protect you from certain claims by users that the software does not suit their purpose or always operate without defects. This is important because software can have bugs that only become apparent once released to the mass market.

If you are using an EULA as an addition to an overarching licence between you and a business, then the EULA will ensure you have recourse to address any issues directly with the individual employees who use the software, rather than only having a legal relationship with the business. This gives you greater control over the use of your software and ensures, if required, you are also able to take action against an individual user.

How Do Users Accept an EULA?

Users accept an EULA in two ways. How they do so depends on the type of software.

First, if it is a physical product, such as software purchased in a box with an installation disc, the user will have accepted when they remove the packaging from the product. This is called a shrink-wrap licence.

Secondly, if the user downloads the software, they will see a pop-up box with the terms and conditions. To download, they will need to click ‘I agree’. By clicking the checkbox, they will accept the licence. This is known as a click-wrap licence.