Why do you need EULA (End-user license agreement)?


End-user license agreement for your software (hereinafter referred to as the EULA) is an agreement that gives the user the right to use the software in a certain way. EULAs are typically used for a one-time sale of software, and the end user digitally agrees to the terms of the agreement by clicking the “I agree” button.

One of the main tasks of the EULA is the definition and restriction of user rights in the context of the use of certain software. The purpose of the EULA is also to protect the intellectual property (hereinafter referred to as IP) of the software provider.

However, there are several other terms that can be used to describe agreements that perform essentially the same function:

  • License agreement
  • Software License Agreement
  • Licensed Application End User Agreement
  • Terms and Conditions Agreement
  • Click wrap license
  • Browse-wrap license

It is worth recognizing that while many of these terms are used interchangeably, some of them may have a slightly different focus or legal function. In official documentation, the use of “End User License Agreement” or “EULA” is often the most appropriate.

EULAs are sometimes confused with Terms of Service (TOS) and Service Level Agreements (SLA). The ToS defines which rules an IT service customer must follow in order to continue using the services. The SLA defines what services the supplier will provide and how it will determine the high quality of the services provided.

EULA is not the same as proof of purchase or warranty. When the consumer agrees to these terms of the EULA, he actually agrees to the license terms under which the software may be used. After that, the consumer can proceed to the full installation and use of the product.

Purpose of the EULA

The purpose of the agreement is to protect the rights, including copyright, of software creators and inventors, not consumers.

Typically, EULA clauses include ways in which the buyer:

  • can use the software
  • cannot use the software

The EULA is written to enforce specific usage restrictions, such as installing the software on only one computer. Some EULAs restrict the user’s right to copy the software, including copying the software for backup purposes.

The EULA grants the buyer the right to use the software, however the buyer does not own the software and therefore has no legal ownership rights. All he has is the right, or license, to use the product. The user also cannot sell or transfer the software to a third party.

An example is a lease agreement. The tenant has the right only to use the house (residence), but he does not own the house and cannot sell it to someone else (dispose of).

The same applies to the EULA. The buyer is licensed to use the software, but ownership remains with the developer.

Unlike many physical goods, where ownership changes hands after the transaction is completed, the purchase of software is an ongoing relationship between the seller and the user. These relationships require the establishment of boundaries. EULAs set out what the user can and cannot do with the software, define the terms of the agreement, clarify liability, provide information about violations, indicate the disclaimer of liability, and determine how and when the right to use the application may be terminated.

Is the EULA required by law?

The law does not require you to provide the EULA to your users. However, you and your business may run into legal problems if you do not write down such an agreement.

Does the EULA provide legal protection?

Under the laws of any jurisdiction, a contract is binding only when both parties mutually agree to its terms. Thus, the EULA is mandatory if the user gives their consent to the agreement, and the language of the EULA is clear enough for the user to understand that he is entering into a contract with you.

The EULA clauses govern the relationship between you and the end user. The basic legal guarantees of the EULA provide you with the following:

  • Verifies your ownership
  • Explains to the user the rights granted by the license
  • Restricts the use of the license
  • Limits Liability
  • Describes license termination

The EULA may provide some protection against possible legal action by an end user who claims that your software has harmed or harmed him or his company.

When do you need a EULA?

EULA is necessary when you want to achieve the following goals:

Limit IP infringement

The software or application is your invention. The user only has a license to use it.

The EULA prohibits the user from copying your product, reverse engineering it, distributing it to third parties, or using it for illegal purposes.


This clause limits any liability of the end user for damages resulting from the use of your application or software. This limitation is especially important for new products because some manufacturing or design errors or errors may not be apparent until the product is in use.

Giving control

You determine the terms of the license. For example, you may only offer your product for personal or commercial use. Or you can set location restrictions, for example, the software can only work in North America.

In addition, the right to control the grant of a license includes the right to revoke a license. As we’ll discuss later in this guide, EULAs often contain a clause that allows you to terminate the license if you find that a user has violated the EULA and infringed your copyright.

Where to place the EULA?

Most importantly, make sure your users agree to your EULA before they purchase the software or app and start using it.

There are two main points where you can display the EULA:

  • Before downloading or installing software or applications
  • After the download or installation is complete.

Any of these options are acceptable, but you must ensure that your EULA is easy to find and prominently displayed both when the end user first consents, and later if they need to review it.

Another important point for you as a software owner is that the EULA is mandatory. That is why it cannot be optional, only after “signing” the contract with you, by ticking the box, the user can start using your software.

Along with the obligation is the clarity of the provisions of the agreement, since the user must clearly understand what he agrees to. It is important to avoid legal jargon and narrow professional vocabulary.


Perhaps the most important task of the EULA is to establish the ground rules that users must follow. Be clear about how the software is to be used and what restrictions will apply.

For example, an important aspect of using software is the type of copyright or intellectual property license that applies to it. For example, an open source application allows the user to perform certain actions that would be prohibited if using closed source software. Copyright disclosure tells the end user what to expect.

The EULA will allow you to confidently sell your software or application to end users. Its purpose is to protect your property rights, establish end user obligations, limit your legal liability, and restrict users’ rights to use your software or application in any way. This is an indispensable agreement that is essential for your business, which can protect you from a lot of problems in the future.


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