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End-user license agreement

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End-user license agreement

An end-user license agreement or EULA (/ˈjlə/) is a legal contract between a software supplier and a customer or end-user.

The practice of selling licenses to rather than copies of software predates the recognition of software copyright, which has been recognized since the 1970s in the United States. Initially, EULAs were often printed as shrink wrap contracts, where tearing the shrink wrap indicated acceptance. Software distributed via the internet is more commonly licensed via clickwrap (where the user clicks to agree to the license) or browsewrap (continuing to browse the website indicates agreement).

Most companies prefer to sell licenses rather than copies of the software because it enables them to enforce stricter terms on the end user in a number of domains, especially by prohibiting transfer of ownership or use on multiple computers, and by asserting ownership of the copyright of derivative works, such as user-generated content in video games.

Enforceability of EULAs has been a controversial issue and varies by jurisdiction. In the United States, it is possible to enforce a EULA that is shown to the customer after purchase, but this is not the case in Germany. European Union law only allows for enforcement of EULAs insofar as they do not breach reasonable customer expectations.

The source code (or compiled binaries in the form of object code) of a computer program is protected by copyright law that vests the owner with the exclusive right to copy the code. The underlying ideas or algorithms are not protected by copyright law, but are often treated as a trade secret and concealed by such methods as non-disclosure agreements. Software copyright has been recognized since the mid-1970s and is vested in the company that makes the software, not the employees or contractors who wrote it.

The tendency to license proprietary software—to sell the right of use of the software rather than a copy of the software—dates from the time period before the existence, then the scope of software copyright protection was clear. These licenses have continued in use after software copyright was recognized in the courts, and are considered to grant the company extra protection compared to copyright law. Virtually all proprietary software is not sold as a copy but rather as a license with associated EULA.

Initially, end-user license agreement (EULAs) were printed on either the shrinkwrap packaging encasing the product (shrink wrap contract) or a piece of paper. The license often stipulated that a customer agreed if they did not return the product within a specified interval. After the advent of the internet, EULAs are more often found in clickwrap format where the user only needs to click an agree button. Without the constraints of having to print the license, the length of the agreements ballooned. Another type of license, browserwrap, intuits the user's consent after they simply visit a website and are made aware of the terms of use.

EULAs are often written in vague language, and do not inform the customer of the limitations on the agreement's enforceability. Most EULAs have been designed so that it is very difficult to read and understand them, but easy to agree to the licensing terms without reading them. Regardless of how easy it is to access, very few consumers read any part of the license agreement. Most assume the terms are unobjectionable or barely notice agreeing while installing the software. Companies take advantage of consumers' inattention to insert provisions into EULAs. Many assert that the purchaser is an adult and takes responsibility for minors' use of the product, to relieve the vendor of the issue of contracting with a minor and liability from minors' use of the product.

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