EULA and You

An End User License Agreement or Software Agreement is a legal agreement that will accompany your software when it is distributed on the Internet. Recently I’ve been spending a fair amount of time on EULA’s and the topics come up a few times. Although I think their legality is still in question, as I don’t believe they have been thoroughly tested in court, I still think EULA’s are a piece to your overall legal protection, along with a limited liability entity.

EULA’s are everywhere and seem to be used by everyone. But as a small business or a bootstrapping startup how can you get an EULA that you are sure will offer you some protection? As software developers I think we tend to look for an existing EULA in a product we’ve downloaded or already own and use that. Why re-invent the wheel when it’s already done. But you can get into some serious issues here.

First the law, legal language and legal formatting are all very important. You could have an entry EULA thrown out because of punctuation or capitalization, so this is something to keep in mind. Legal language in of itself can be extremely complex, from subtle meaning changes in common words to all out Latin. So DIY with an EULA can have some bad repercussions, especially because when you really need it is when it will be put to the test, i.e. in court, and that could cost you.

So what should a good EULA contain? Here are some tips you should look for in an EULA.

1. Software is licensed not sold, license only
2. Rights of the end user (how many computers it can be installed on, etc)
3. License is valid and granted when/while it’s been paid for
4. Limited Liability (you are not responsible for any damages beyond the purchase price)
5. No warrantee or implied fitness
6. User support/assistance if applicable
7. License should be perpetual (in most cases), notice on material breach if failure to comply
8. Force Majeure (Act of God) protection
9. Provision ensuing that if part of the EULA is invalid, the remainder will still be in effect
10. Governing Law should be your place of incorporation
11. Notice with your companies contact information

This isn’t an all inclusive list, as there can be much, much more important parts of an EULA. For example if your distributing source that should be in your EULA as well to determine the extent of the rights transferred with that source.

So what is the best way of going about creating an EULA for your software? Well do you have a lawyer in the family or a friend that’s a lawyer? Well if you do beg and plead. If you can find a decent corporate law lawyer in your area I would recommend that as well. But if you can’t there are a number of sites that can help. For example LawDepot.com has and EULA that is constantly being updated. If your planning on multiple software products you can by the year version which will allow you to update and generate new EULA’s for all your products for a year, that costs between 50 and 60 dollars.

If your planning to go it completely alone you can do your research. Onecle has a list of over 5000 EULA and EULA like agreements you can view. There used to be a number of EULA generates on the web but it looks like they are all gone, which may be for the best. Also there doesn’t seems to be a nice generic EULA template to start from.

Bad Software: What to Do When Software Fails is also an interesting read. The book is a little dated now, but the underlying still holds true. Also Legal Guide to Web & Software Development from Nolo has lots of information plus some forms and agreements that can be used, including an EULA.

The bottom line, hire a lawyer if you can, else try and use a professional resource (like LawDepot or Nolo). If you can’t do that take care when crafting your EULA and compare it to the other ones out there.