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Click-Wrap and Shrink-Wrap EULAs

July 2021

Software comes in all shapes and sizes. It may be free, freemium, or premium; it may be proprietary or open source; it may be an entire operating system, or it may control the tiniest component inside the simplest appliance. What most software has in common, however, is that it will be (or should be) covered by a licence agreement of some form.

Some software will be highly bespoke and may even be assigned by a developer to a client instead of licensed, but a great deal of it is standard and off-the-shelf in nature and requires a similarly standardised approach to licensing. Instead of the specifics of licences being negotiated between the developer and each individual user, all users will be presented with the same standard terms.

An End User Licence Agreement or “EULA” is, at its core, a contract between the owner of the rights in a piece of software (such as the developer) and the end user. Where off-the-shelf software is concerned, the software will often be purchased by the end user from another party such as a reseller. While there will be a contract of sale of some form between the user and that reseller, it will be quite different from the EULA and will not typically address the use, rights, and restrictions relating to the user’s use of the software.

Click-Wrap or Shrink-Wrap?

EULAs come in various forms. Software is most commonly distributed electronically now, downloaded instead of purchased on a CD-ROM in a box. Click-wrap EULAs are best suited to this method of distribution. The user will be presented with the terms of the EULA before downloading or during the installation process and will be required to indicate their acceptance before the software can be installed.

Shrink-wrap EULAs, as the name suggests, are geared more towards the traditional approach and may be printed on packaging (beneath the shrink-wrap, naturally) or, for example, included in a readme file on the installation media. Acceptance of a shrink-wrap EULA may also be built into the installation process or may simply be indicated by the action of the user installing and using the software.

New and Updated EULA Templates

Our existing Click-Wrap and Shrink Wrap Software Licence templates have been comprehensively reviewed and updated to bring them into line with current best practice. For improved clarity and fairness, they have also been split into B2B and B2C versions. The original documents have become the B2B templates and new B2C templates have been added to our portfolio.

For the most part, the B2B and B2C versions of these EULAs are the same, but they differ in some key areas, most notably the limitation of liability, and the licensor’s responsibility for damage caused to the user’s device or digital content by digital content provided by the licensor, such as a free update or software patch.

It is important to note that these EULAs are not designed for situations in which the software is sold directly to the end user by the licensor. The templates are drafted on the assumption that the software is sold by another party such as a reseller. This is particularly important in the business-to-consumer context as key consumer rights arising out of the Consumer Rights Act 2015 which would be required in a contract of sale are not addressed.

Key provisions in these documents govern ownership, the terms and restrictions in the licences granted to licensees, the making of copies, decompiling and reverse engineering, warranties, and liability.

Browse Wrap EULAs Coming Soon

Our existing Web-Wrap Software Licence has now effectively been replaced by the new and updated Click-Wrap agreements. Next month, the existing Web-Wrap template will be receiving the same review, updates, and enhancements and will be changing its form to a browse-wrap licence in B2B and B2C variants.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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