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What is an End User License Agreement (EULA)? It is the license agreement between a software provider and the end user, stating the conditions under which the user may use the software. An EULA does not sell the software, but grants a right of use: the user may use the program within the limits set by the license. The EULA regulates what is and is not permitted, protects the creator's copyright, and limits their liability. For software companies, it is the document with which they legally establish the terms for the use of their product.
The short answer
- What: a license agreement that regulates the right to use software between the provider and the end user.
- Purpose: To define what the user is allowed to do with the software and to protect the copyright.
- Basis: copyright on software (Copyright Act) and the law of obligations.
- Core: right of use, restrictions, intellectual property, liability and termination.
- Form: often general terms and conditions that the user accepts upon installation or use.
What exactly is an End User License Agreement EULA?
Software is protected by copyright. Whoever creates a program has the exclusive right to reproduce it and make it public. This means that a user cannot simply do whatever they want with the software. An EULA resolves this by granting the user a license: the right to use the software under certain conditions. The software therefore does not become the property of the user; they receive a right of use.
The EULA determines the scope of that right. Is the user allowed to install the software on one device or on multiple, for commercial or private use only, and with how many users simultaneously? The EULA also regulates what is prohibited, such as copying, reselling, reverse engineering, or modifying the software outside legal limits. In this way, the provider maintains control over how its product is used.
What does an EULA regulate?
An EULA typically contains the following components:
- Right of use: the scope of the license (devices, users, commercial or private).
- Restrictions: what the user is not allowed to do, such as copying, reselling, or modifying.
- Intellectual property: the confirmation that the rights remain with the provider.
- Updates and maintenance: whether and how the software is updated.
- Liability: limitation of the provider's liability.
- Termination: when the license ends and what happens then.
The legal limits of an EULA
An EULA cannot prohibit everything. The Copyright Act provides for several mandatory user rights for software that you may not exclude contractually. For example, pursuant to Article 45j of the Copyright Act, the lawful user may use the software for the intended purpose, including correcting errors, and pursuant to Article 45k, he may make a backup copy if this is necessary for use. Decompilation is also permitted under strict conditions (Article 45m of the Copyright Act) to achieve interoperability with other programs. These rights stem from the European Software Directive and take precedence over the provisions in the EULA.
In addition, EULAs often contain general terms and conditions. Conditions that are unreasonably onerous may be annulled (Section 6.5.3 of the Dutch Civil Code). Furthermore, if you sell software to consumers, additional protection rules and information obligations under consumer law apply.
EULA, license and terms of use
In practice, the terms are used interchangeably. An EULA is the agreement with the end user regarding the use of installed or downloaded software. For online services, the term terms of use or terms of service is more common, and for software as a service, a SaaS agreement with a subscription model. The legal core remains the same in each case: the provider grants a right of use and sets conditions in doing so. Which form is appropriate depends on how the software is delivered and whether it concerns a one-time license or an ongoing service.
A practical example: an SME software company launches a desktop program that customers download and install. With an EULA, the company stipulates that the license applies to a single company, that resale is not permitted, and that liability is limited. Without an EULA, the company would fall back on general statutory rules for any dispute, which provides much less certainty.
Honest recommendation
You don't always need a lawyer. For a small, free utility without commercial interest or sensitive data, a simple, recognizable open standard license is often sufficient. However, as soon as you offer software commercially, process customer data, wish to limit liability, or supply it to consumers, a custom-made EULA is advisable. The combination of copyright, mandatory user rights under the Copyright Act, and consumer law means that an EULA copied from the internet often does not fit your product and, in the worst case, is partially invalid.
Want to know more? View the End User License Agreement (EULA), read about drafting an EULA and having an EULA drafted.
Frequently Asked Questions
An end user license agreement is the license agreement between a software provider and the end user. The user does not purchase the software, but obtains a right of use under the conditions stated in the EULA.
The right of use (for how many devices and users, commercial or private), the restrictions such as a prohibition on copying and resale, intellectual property, updates, the liability of the provider, and the termination of the license.
No. You acquire a right of use, not ownership. The software remains protected by copyright, and the rights remain with the provider. The EULA determines what you may and may not do under that license.
No. The Copyright Act provides for mandatory user rights that you cannot exclude, such as use for the intended purpose and error correction (Article 45j), a backup copy (Article 45k), and decompilation for interoperability (Article 45m). Unreasonably burdensome conditions can be annulled.
An EULA governs the use of installed or downloaded software. Terms of use or terms of service are more common with online services, and for software as a service, a SaaS agreement is used. The legal core, a right of use subject to conditions, is the same in each case.
Yes. When supplying to consumers, additional protection rules and information obligations under consumer law apply. Conditions that are unreasonably burdensome can be annulled pursuant to Section 6.5.3 of the Dutch Civil Code.
Not always. For a small, free program, a standard license may suffice. If you offer software commercially, process customer data, or supply to consumers, a custom-made EULA is advisable, as a copied EULA often does not fit.
