Last Updated December 28, 2023
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What is a Software Licence Agreement?
A Software Licence Agreement, commonly known as an End User Licence Agreement (EULA), is a contract that allows a user to buy the rights to use a computer program, software, or application. This agreement does not transfer ownership of the software but permits the buyer to use it according to certain terms and conditions.
An EULA often appears as a pop-up before or after you download a program or install an update on your computer. Software programs sold through a retailer or mail order may come with a physical copy of a licence agreement.
Whether it appears in digital or physical form, this agreement is important for software developers who want to maintain some control over the use and distribution of their intellectual property.
Who are the parties to an End User Licence Agreement?
- The licensee (also known as the end-user, purchaser, or buyer) is the individual or organisation buying the rights to use a computer program, software, or application.
- The vendor (also known as the licensor or publisher) is the individual or organisation selling the rights to use their product.
How do I write an EULA?
Fill out LawDepot’s Software Licence Agreement template to generate your personalised contract.
1. Specify information about the licensee and the vendor.
2. Detail when the licence takes effect and the length of the licence term.
3. Provide details about the product and its use, such as:
- The licence fee
- If the licence includes the software source code
- The permitted number of installations
- If the vendor offers maintenance and technical support
- If the vendor will issue refunds for non-conforming software
The EULA may be effective perpetually (i.e. the licence does not expire) or for a specific time frame (e.g., one year). Use our template to specify the moment the user’s licence becomes effective, such as when the user:
- Signs and accepts the agreement,
- Opens the package seal, or
- Registers or installs the software.
LawDepot’s EULA template also includes clauses to protect the vendor’s intellectual property and restrict the user from reverse-engineering or modifying the product.
What terms does a Software Licence Agreement include?
In addition to the licence terms mentioned above, LawDepot’s EULA template also addresses provisions such as:
- Limitation of liability: limits the consequences a vendor may face if issues stem from the use of their software
- Warrants and representations: clarifies copyright
- Termination: outlines the process of termination if the end-user fails to comply with the agreement
- Force Majeure: limits the vendor’s liability when problems arise from an unforeseen and uncontrollable event (e.g., if a natural disaster causes the product to malfunction)
If needed, you can add a clause that’s specific to your product and not already included in the template. For example, a vendor may need to detail further restrictions on the end-user because the product allows users to create content. In this case, the vendor may reserve the right to moderate content that meets certain criteria (e.g., “A non-exhaustive list of content that may be rejected by the Software Publisher includes…”).
When using LawDepot’s EULA template to write your own clause, follow these tips:
- Use everyday language and full sentences.
- Capitalize any defined terms, such as Licensee and Vendor.
- Do not use pronouns (e.g. “we” and “they”) to refer to the parties in the agreement.
Contact a local attorney if you’re unsure how to address a particular use for your Software Licence Agreement.
What happens if someone violates the EULA?
A Software Licence Agreement often protects a vendor’s intellectual property rights by stating the licence is for use only and is not a transfer of ownership. Including an EULA with the distribution of software can provide some legal protections if the end-user violates the terms of the agreement. However, laws may vary by jurisdiction.
EULAs are unique because they are contracts that can (and often do) cross borders. As such, the vendor should review and consider how different jurisdictions enforce and uphold Software Licence Agreements.
Are EULAs enforceable?
Typically, if the EULA meets the criteria for a legally binding contract, then courts can enforce the terms of the agreement.
If the vendor becomes aware of misconduct, they can send a Cease and Desist Letter to request a stop to the behaviour and to warn of potential legal action. In a lawsuit, the vendor could use a signed copy of an EULA as evidence of the licensee’s agreement to abide by the software terms and conditions.
LawDepot’s EULA template contains a customizable term for governing law. Select a province for the enforcement of your agreement. In this case, if a dispute arises, both parties agree to abide by the laws and court rulings in that jurisdiction.