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  • Daniel D. Sanders

Understanding End User License Agreements

Updated: Apr 24, 2019



An End User License Agreement, or EULA, is a type of contract between a software application and its user. Specifically, a EULA works as a licensing contract, allowing the user to license the software within the permitted guidelines. Because a EULA is a license, it works differently from a typical contract.


Licenses vs. Contracts

A licensing agreement differs from a traditional contract in the same way that buying a car outright differs from leasing one. If you buy a car, the contract gives you the right to do with it as you wish. Paint it. Take the doors off it. Go crazy. However, if you lease a car, you’re licensing it for a set period of time and expected to give it back in the same condition when the lease expires.


Restaurant Licensing Agreements


Restaurant franchisees are another example of a licensing agreement. McDonald’s Corporation allows franchisee owners to license its marketing and branding. Individual franchisees can operate in different ways so long as they comply with McDonald’s overall guidelines. Buying a video game or installing software on a computer is like entering into a car lease agreement or a franchisee licensing deal. The user is agreeing to license and operate the software within the terms dictated by the EULA.


Issues with EULA's

EULA’s are often difficult to read due to their length and technical legal jargon. It would take the average user weeks to read through all the EULA’s he or she accepts each year. As a result, users often blindly agree to them without fully comprehending what they’re agreeing to. This leads to criticism after the fact when users come across clauses they were unaware of when they accepted.


Many EULA’s have unenforceable clauses inserted to work as scare tactics against uninformed consumers. One example that is controversial is a clause preventing users from criticizing the product publicly. This has caused backlash from many claiming it restricts free speech and couldn’t be enforced in a court of law. Users have also criticized some games’ EULA’s for collecting a worrisome amount of personal information, including location monitoring.


Other criticisms of EULA’s include clauses that ban reverse-engineering the product, enforce accepting changes to future versions of the product, and limit responsibility if the product harms the user’s computer.


Combating Unfair EULA's

Resources exist for users looking to combat EULA’s that they perceive as unfair. The Electronic Frontier Foundation is a nonprofit organization that works to defend civil liberties in the digital world. The EFF has been fighting for user rights and working to influence policy for nearly 30 years. The nonprofit specializes in advocating for free speech in digital spaces, limited  user surveillance and the creation of technologies that empower freedom among users. As technology continues to expand, watch groups and networks like EFF are becoming more important in protecting the rights of users.


Despite being difficult to understand and often being criticized for their clauses, EULA's are a crucial part of the software and gaming industries and will remain a required threshold for users. To guard against unforeseen consequences, it's important for users to remain educated about the software that they're licensing. While software companies hold the power in their ability to restrict use of their product unless a user agrees to a EULA, advocacy groups like the EFF are working to level the playing field and protect users' rights and freedoms.


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