7 key provisions to include in a EULA template for software vendors
1. Grant of the software licence
The grant of the licence to use the software is the crux of every EULA template. This section should include wording that states that a licence is being granted to the end user to use the software subject to certain rules and restrictions.
The EULA template may also include specific obligations that should be carried out by the end user to safeguard the software from unauthorised use, such as keeping their password private and secure.
By including this clause, the software owner defines the scope of use, ensures compliance with their licensing model, and clarifies the permissions associated with the usage of the software. This helps prevent misunderstandings with the end user, whilst promoting responsible and compliant use of the software.
2. Restrictions on the use of the software
Imagine the sale of software without rules - with users having the ability to distribute, tinker with the code and exploit your intellectual property without your permission. For this reason, the restrictions of use clause, also known as limitations, is imperative in every EULA template.
This section of the EULA template will lay down the boundaries for responsible use of the software. Typically, this section will include restrictions on:
sell, distribute, reproduce, or transfer it to others without permission;
tamper with its code, proprietary notices, or copy protection;
use it for illegal or immoral activities;
exploit it commercially for gain; and/or
create similar software or mimic its functionality.
This clause, in conjunction with the grant of licence clause, allows the end user to use your software, while setting clear parameters for how it can be used. Including this clause therefore encourages responsible use of the software while aiming to prevent potential misuse of the software.
This clause is essential for the software owner to include in a EULA template because it explicitly outlines that the software and its intellectual property rights are owned either by the software owner or by parties the owner holds a licence with.
In summary, this clause will make it clear that although the end user will be granted access to the software, they do not gain any ownership rights over the software itself or any associated intellectual property.
By including this clause, the software owner safeguards their proprietary interests and clarifies that users are only granted usage rights as outlined in the EULA. This clause prevents any misunderstandings regarding ownership and ensures that the software owner retains control over their creation.
4. Limitation of liability
The liability clause in a EULA template plays a fundamental role in handling accountability and managing expectations if the software does not work as planned.
Depending on whether the EULA template is designed for business customers or consumer end users, this clause may look a little different. For example, consumers are protected by consumer rights laws such as the Consumer Rights Act 2015, so it’s crucial that any limitations of liability comply with those rules. For more guidance on navigating consumer rights laws for businesses, check out the Government's website for guidance.
On the other hand, with business customers, there’s more freedom for the service provider to set limits on its liability (except for liabilities that cannot be excluded by law). However, all limitations with business customers must be reasonable (as required by laws that affect business-to-business transactions, such as the Unfair Contracts Terms Act 1977).
5. Limited warranties and disclaimers
End users should be aware that they are using the software at their own risk. For this reason, a well-drafted EULA template often includes limited warranties whilst providing users with clear information about what they can expect from the software, for example:
The user is responsible for ensuring that the software is suitable for their specific requirements;
You cannot guarantee that your app is entirely free from viruses and malware as this is beyond your control;
Use of the software might not be entirely free of errors or uninterrupted 100% of the time; and
The software is provided “as is” and the user takes responsibility for the outcomes of its use.
You should always refrain from making assurances to end users that you cannot commit to in relation to the software. If you cannot guarantee flawless, uninterrupted performance of the software at all times, it's best to avoid including promises like this in your EULA template!
6. Termination and consequences of termination
As important as it is to grant users access to your software, it is also important to ensure that your EULA template includes the right for the software provider to revoke the licence. The service provider should have the right to terminate the agreement or suspend use of the software if the end user fails to comply with its terms.
This clause should also include wording that ensures that once the EULA is terminated, the end user no longer has any rights to use the software and related materials. Although it may seem obvious, the EULA template should make it clear that the end user must stop using the software and remove the software from all devices. This clause helps to clarify the responsibilities and actions that need to be taken by the user upon termination.
This ensures that the service provider maintains control over its software, while also indicating to the end user that their access will be revoked if they break any of the rules set out in the EULA template.
7. Governing law and jurisdiction
Your EULA template should clearly state the jurisdiction (i.e. geographical location, such as England and Wales) whose laws will govern the terms and conditions of the EULA. This is typically contained in the very last clause of the contract and serves as a foundation for addressing any disputes that might arise within the context of the agreement.
Top tip: Make certain that any disputes arising in connection with the software are exclusively resolved within a court located in your designated jurisdiction. Opting for a foreign jurisdiction could create unwanted challenges for you, particularly if you're unfamiliar with its legal procedures and are required to travel to a court in that region.
Building trust with users by using Docue’s EULA template
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User-friendly: By utilising Docue's intuitive interface, you can effortlessly customise the scope of the software licence, define user restrictions, and safeguard your intellectual property rights — all while instilling confidence and trust in your users.
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