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Drafting an End User License Agreement (EULA) involves defining the usage rights you grant the end user, the limitations that apply, and how you protect your copyright and liability. The EULA must align with the way you deliver the software and with legal limits: you cannot exclude certain user rights under the Copyright Act, and unreasonably burdensome conditions can be invalidated. A well-drafted EULA provides your product with clear rules and protects your position without violating mandatory law.
The short answer
- Right of use: determine the scope (devices, users, commercial or private).
- Restrictions: define what is not allowed, within legal limits.
- Intellectual property: confirm that the rights remain with you.
- Liability: limit your liability and provide any warranties.
- Updates and termination: maintenance rules, duration, and what happens upon termination.
- Acceptance: ensure that the user demonstrably accepts the EULA.
Drafting an End User License Agreement (EULA): the core provisions
The heart of the EULA is the right of use. Describe as precisely as possible what the user is permitted to do: on how many devices they may install the software, with how many users they may use it simultaneously, and whether the use is commercial or private only. Do you opt for a license per user, per device, or per organization? That choice determines how you can market your product and how you can monitor compliance.
Next, establish the restrictions. Consider a ban on resale, rental, sublicensing, copying beyond permitted limits, and the removal of copyright notices. It is important that you respect the legal limits here. A ban on any form of copying or error correction conflicts with the mandatory user rights under the Copyright Act and is therefore invalid.
Respect the mandatory user rights
The Copyright Act grants rights for software that you cannot exclude contractually. The lawful user may use the software for its intended purpose, including correcting errors (Article 45j of the Copyright Act). He may make a backup copy if necessary for use (Article 45k). And under strict conditions, he may decompile the software to achieve interoperability with other programs (Article 45m). These rights derive from the European Software Directive and take precedence over your EULA.
Therefore, do not include provisions in your EULA that completely exclude these rights. However, you may further define the use, for example by limiting the number of backup copies to what is necessary or by making it clear that decompilation is only permitted within legal limits. This ensures your EULA remains valid and enforceable.
Liability, warranties and termination
Limit your liability carefully. Software almost always contains defects, and you do not want to be liable for all consequential damages that may arise from them. A common approach is to limit liability to a maximum amount and exclude consequential damages. Note: with consumers, you cannot exclude liability indefinitely, and a clause that is unreasonably burdensome may be annulled (Section 6.5.3 of the Dutch Civil Code). Nor can intent and conscious recklessness be contracted away.
Furthermore, regulate updates and maintenance, the duration of the license, and termination. Determine what happens if the user violates the terms: typically, the license terminates, and the user must cease use and delete copies. Finally, ensure that the user demonstrably accepts the EULA, for example by means of an agreement checkbox during installation, so that the terms truly become part of the agreement.
A practical example: an SME software company drafts an EULA for a paid program. The company grants a license per workstation, prohibits resale, limits liability to the license fee, and requires the user to agree upon installation. Because the mandatory user rights are respected and acceptance is demonstrable, the EULA holds up if a customer challenges the terms.
Honest recommendation
You do not always need a lawyer. If you release a small, free utility program without commercial interest, a well-known standard license will suffice. However, as soon as you offer software commercially, wish to limit liability, process customer data, or supply it to consumers, it is advisable to have the EULA drafted or reviewed. The alignment between your usage restrictions, the mandatory user rights under the Copyright Act, and consumer law requires careful attention, and it is precisely in this area that a copied EULA runs into difficulties.
Want to read more? View the End User License Agreement (EULA), the explanation of what an EULA is , and having an EULA drafted.
Frequently Asked Questions
The right of use with its scope, the limitations, the confirmation that the intellectual property remains with you, the limitation of liability and any warranties, the arrangement for updates and termination, and demonstrable acceptance by the user.
Describe on how many devices and by how many users the software may be used, and whether this is for commercial or private use. Deliberately choose a license per user, per device, or per organization, as this determines your revenue model and enforcement.
For example, a prohibition on resale, rental, sublicensing, and the removal of copyright notices. However, you may not include provisions that completely exclude the mandatory user rights under the Copyright Act.
Use for the intended purpose and error correction (Article 45j of the Copyright Act), making a necessary backup copy (Article 45k), and decompilation for interoperability under conditions (Article 45m). These rights take precedence over your EULA.
Usually by limiting liability to a maximum amount and excluding consequential damages. For consumers, this cannot be done without limit, and unreasonably burdensome clauses can be annulled (Section 6.5.3 of the Dutch Civil Code). Intent and conscious recklessness cannot be excluded.
By having the user demonstrably accept the terms and conditions, for example with an agreement checkbox during installation or use. Only then do the terms and conditions become part of the agreement and are they enforceable.
For a small, free program, a standard license may suffice. If you offer software commercially, wish to limit liability, or supply to consumers, it is advisable to have a license drafted or reviewed, as alignment with mandatory law requires careful attention.
