If you choose to sell your software as a service (SaaS),  a reseller agreement allows another business to market and sell your software. While you won’t face the additional pressure of establishing a sales team with a reseller agreement, you do lose some control over your SaaS. Having an end user licence agreement (EULA) to complement your reseller agreement enables you to maintain some control over your SaaS. This article explains what exactly an EULA is, and why having one is beneficial.

Defining an EULA

An EULA is an agreement between you as the SaaS supplier, the software provider and the end user. The end user is the customer who logs on and uses your software. An EULA sets out terms governing how the customer can use your software. Usually, an EULA for a SaaS will pop up when a customer first logs in. The customer will need to read your licence terms and conditions and then click to agree to the terms.  By clicking that they agree to the terms, the customer accepts the licence.

How an EULA Complements a SaaS Reseller Agreement

An EULA provides you with greater control over your SaaS. When a customer purchases your SaaS from a reseller, they buy the right to access the SaaS. Without an EULA, customers can potentially negatively impact others who use the software. While an EULA is useful for your SaaS, it is unnecessary for other resale agreements. For example, when someone purchases a television, they receive a physical product, and their use will not impact others. In contrast, the SaaS may be accessible by many customers at once because it is hosted via cloud computing. Therefore, the nature of the SaaS may potentially allow a customer to enter data that affects others.

Prohibited Uses

An EULA can allow you to delete offensive content and prohibit customers from posting such. Restricting the right of customers to post third party content unless they obtain explicit permission reduces your liability for breach of copyright.

You should make it clear that you are not assigning any rights to your intellectual property. Further, you should ensure the EULA states that the code may not be accessed and copied, or repurposed.

Limiting Your Liability

The nature of software means that it may temporarily become unavailable, for example, during upgrades and downtime. It is important that customers understand this. If you continue to host and maintain the SaaS, your EULA may offer direct support to customers. Including liability disclaimers in the agreement is essential to limit your risk of liability. 

An EULA provides you with options for enforcing consequences in the event of a breach. The reseller agreement places obligations on the reseller to account for their customer’s misuse of the software. However, the EULA allows you to enforce consequences of a breach directly against a customer. For example, you can cut off customer access without having to consult the reseller.

Including your EULA in a SaaS Reseller Agreement

Your reseller agreement should set out that your EULA is a direct contract with your customers unless otherwise specified. The licence details typically include that if the reseller does not ensure customer compliance with the EULA, they may be liable. To enforce the EULA, you should also outline your right to monitor use of your SaaS within the reseller agreement.

Key Takeaways

An EULA allows you, as a SaaS supplier, to retain control over the use of your SaaS despite the reseller agreement. The EULA is a direct contract between you and the customer. It provides you with better legal recourse, and in the event of an issue arising, you can turn to the reseller via either of the two documents.

If you have any questions or need assistance with an EULA, get in touch with one of LegalVision’s IT lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Jacqueline Gibson

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