User Agreement: Definition, Purpose, Key Terms

Software and web application owners must inform users of the applicable rules. In some cases, it’s legally required. Your user agreements should be created with the company, users, and governing contract laws in mind.

The article below helps you understand what you need to know.

What is a User Agreement?

A user agreement, also known as an end-user license agreement (EULA), is a legally binding contract between a website or application owner and their users. The provisions of user agreements explain their rights, responsibilities, and limitations.

Other types of of user agreements may include:

• Acceptable use policy
• Browser-wrap agreement
• Clip-wrap license
• SaaS agreement
• Shrink-wrap license
• Software license
• Terms of service
• Terms of use

Some situations legally require you to have a user agreement. For example, suppose that you’re collecting user information in Europe. You must follow General Data Protection Regulation (GDPR) and incorporate a privacy policy into your user agreement accompanied by a consent banner.

Here is an article on the GDPR.

Purpose of a User Agreement

The purpose of a user agreement is to protect you from liability incurred by users or information presented. It generally insulates you from legal actions and damages related to specific events. If you operate a website and create content, you must have a user agreement to safeguard your company.

In short, a user agreement’s real purpose is to protect the company from the ever growing and changing rules with how you are required to interact with users online. If a company is growing and building technology assets, it is wise to have a user agreement to prevent risks created by non-compliance of internet and consumer regulations.

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Key Terms in a User Agreement

The key terms in a user agreement are essential to validity and enforceability. Otherwise, a poorly written user agreement can render them null and void. Ensure you mitigate the chances of this happening by familiarizing yourself with the key terms in a user agreement before approaching the legal drafting process.

Key terms in a user agreement include:

Term 1. Non-Exclusivity

Non-exclusivity rights permit other companies to license your software. It’s a clause that allows you to continue earning a profit. However, you don’t always need to include non-exclusivity rights if you don’t issue third-party licenses.

Here is a short article on non-exclusivity clauses .

Term 2. Non-Transferability

Use a non-transferability clause when users are not permitted to transfer their license rights to another party. This prohibits the sharing and non-revenue generating use of your website or web application. A non-transferability clause also provides you the right to file a claim for a breach of contract .

Term 3. Rights

Users must also understand what rights remain intact after a contract’s termination. These are essential for protecting your competitive advantages and legal rights.

Your rights may cover:

• Intellectual property rights
• Distribution rights
• API rights
• Copyrights

These rights are critical to preventing a competitor from purchasing your software and converting elements of it into their financial profit.

Term 4. Modifications

Incorporate modifications terms to ensure that users aren’t allowed to alter your program’s backend or coding. You will also want to communicate how you define modifications to your end-users. Some user agreements utilize a blanket modification in that they’re prohibited altogether.

Term 5. Breach of Contract

Breach of contract provisions allow you to revoke a user’s license if a contractual violation occurs. It’s critical to have these guidelines installed so that you can limit specific actions and prevent them from continuing. Otherwise, users may continue to engage in harmful or abusive behavior.

Term 6. Device Usage

You can describe how users may install your software or application on their devices. Some programs are licensed for a single device, while others allow unlimited installations across numerous mediums. State your expectations clearly and leverage technology to prevent unauthorized installs.

Term 7. Limitations of Liability

Limitations of liability provisions prevent users from suing you for damages related to events beyond your control. Commonly covered events usually include system outages and data losses. However, a limitation of liability clause doesn’t preclude you from actions related to gross negligence.

Term 8. Termination

Your termination provisions tell users about the rights of both parties when ending the user agreement. Termination may also instruct users to uninstall digital downloads or destroy hard copies. Many software companies choose to let users know that they retain the right to terminate the agreement at will.

Here is a short article about termination clauses .

Term 9. Choice of Law

Finally, the choice of law clauses tells users which laws govern the contractual agreement. They set the jurisdiction and venue for your location, not the end-user. It’s essential to incorporate a choice of law clause to limit the costs of handling a dispute should one arise.

Here is a short article on the choice of law clause .

Some of the above-referenced terms may not apply to your user agreement. How you structure your document depends upon the type of information displayed and your website’s available features and purpose. Take the necessary steps toward learning how to write a user agreement by reviewing the section below.

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How To Write a User Agreement

User agreements can shield your company or startup from severe legal damage caused by another party. Your business doesn’t have to shoulder more than its fair share of liability. Learning how to write a user agreement correctly will help you achieve a better result.

Take the following steps when writing a user agreement:

• Step 1 . Establish if a user agreement is a right fit for your website.
• Step 2 . Speak with technology lawyers for initial advice and insight.
• Step 3 . Discuss implementing a user agreement with your developers.
• Step 4 . Determine if you will license your software to third parties.
• Step 5 . Construct an acceptable transferability policy among users.
• Step 6 . Think about how many devices can install your software.
• Step 7 . Discuss how modifications worth with your developers.
• Step 8 . Receive a first draft copy of your user agreement from your lawyers.
• Step 9 . Review the initial draft with vital team members on the project.
• Step 10 . Finalize the agreement with your lawyers.
• Step 11 . Implement proper and adequate use of your user agreement.

There are other provisions that you may want to include in your user agreements. Some companies and startups have complicated legal relationships with customers. Technology lawyers are well-suited to answer your questions and provide advice if you want a personalized solution.

Examples of User Agreements

A general legal theory is that you should have a user agreement if you sell products and services through a website and create content. Not only are they crucial for protecting your company’s profitability and reputation, but consumers have come to expect them.

Examples of when to utilize user agreements include:

1. Selling products to consumers online
2. Creating fun and engaging content for users to share
3. Posting blogs and web pages to your website
4. Licensing software to end-users
5. Allowing accountholders to post content in forums
6. Engaging with users to collect data

The application of user agreements is wide-ranging. While it’s tempting to reuse another company’s document as a template, avoid making this mistake. Another company’s user agreement isn’t customized for your situation, which means that your business could experience unintended legal consequences.

Get Help With a User Agreement

Getting help with a user agreement is essential to protecting your business. Technology lawyers offer experienced legal advice when negotiating and drafting a valid, enforceable contract. They will provide a tremendous wealth of information that is invaluable to the experience.

Work to protect your company’s legal rights before a devastating problem arises. It’s the most proactive approach. Stay ahead of the curve and get help from technology lawyers at the start of the contract writing process – post a project here on ContractsCounsel to start getting bids from lawyers.