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Deciphering the end-user license agreement (EULA)

An end-user license agreement (EULA) or software license agreement is a legal contract between the licensor and/or author and the purchaser of a piece of software. The EULA essentially aims at establishing the purchaser’s rights. The agreement must provide details on how and when the software can be used, and specify any restrictions that are imposed on the software. However, EULAs may also assert liability limitations for the software licensor in case of damage to the user’s computer or data resulting from the use of the software. An EULA could also include limitations on whether the licensor can be held liable for damage that arises through improper use of the software. EULAs may also specify venue and applicable law in the event of a dispute. EULAs are usually lengthy and may only be contained in digital form, presented to a user as a click-through where the user must “accept”. Striking the right balance between consumers’ rights and software owners in terms of respective rights and obligations is essential, fair and ensures the legality of the EULA. It must be kept in mind that EULAs may have the enforceability character of a legal contract, be binding on the parties and thus must comply with contract law.