Table of Contents
In Short
- Users actively agree to terms by clicking “I agree,” making it highly enforceable. Best for digital downloads and app use.
- Terms accepted by opening packaging or installation, but enforceability can be challenging as users may not see terms before purchase.
Tips for Businesses
Choose the EULA type based on distribution method, ensuring active consent where possible. For tailored EULA advice, consult legal support to align with consumer laws and strengthen enforceability.
As a software company or software developer offering software products or software packages, ensuring that users comply with your software’s terms and conditions is crucial to protecting your intellectual property and software products. End User Licence Agreements (EULAs) are vital tools for setting out your contract terms and the rights and restrictions on software use. You can use different types of agreements, including shrink-wrap licences and click-wrap licences. How your business presents the EULA to users (whether through a click-wrap, shrink-wrap, or browse-wrap licence) can impact the agreement’s enforceability, particularly in consumer transactions. It is vital that your business carefully considers how to ensure enforceable contracts to protect your business from risk. This article explores the differences between click-wrap and shrink-wrap EULA agreements and considers which contracts are appropriate for your business when offering licences to consumers.
Which Rights Apply to My Software?
Copyright law grants software protection as a literary work in the UK. You can use a software licence to grant users the legal right to use your software under specific conditions. An EULA contract combines this copyright permission with contractual terms to protect your software from risk. It grants users the right to use your software and sets conditions for such use, such as limiting users’ rights to redistribution or prohibiting unauthorised modifications. These safeguards can help protect your software from misuse. There are different types of EULAs your business can use, which we explore below.
What is a Click-Wrap Licence?
A click-wrap licence is an EULA that requires users to actively accept its terms before accessing your software. This usually involves clicking an “I agree” button or ticking a checkbox. Users can only proceed with installing or using the software if they confirm they have read and accepted the terms.
Click-wrap licences are often deemed better for a business for enforceability purposes and are a common choice because they require explicit user consent. By clicking to accept the terms, users can demonstrate that they are aware of and agree to the conditions of use. For your business, this option helps ensure that there is clear evidence that the agreement meets the elements of a legally binding contract.
Click-wrap EULAs also frequently appear when businesses purchase software licences. Employees may be required to agree to the terms of an EULA individually by clicking a prompt before using the software, creating a direct contract between the licensor and the individual user.
Mobile apps also use click-wrap licences, and users must accept the terms before downloading or using the app. In all cases, this approach can help ensure that your business can enforce the contract terms.
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What is a Shrink-Wrap Licence?
A shrink-wrap licence works differently from a click-wrap licence. With a shrink-wrap licence, the user accepts the terms by opening the packaging or continuing with the software’s installation. The EULA terms may be inside the packaging or the installation process, meaning that, in practice, it is harder for users to see them before making a purchase.
Users could commonly find shrink-wrap licences within physical software products like CDs or DVDs. However, with the rise of digital distribution, they have become less common. One major issue with shrink-wrap licences is that users may only have the opportunity to review the terms after purchasing the software, raising concerns about enforceability.
Given shrink-wrap licences depend on implied consent, there are often challenges around whether the user can fairly review them. If your business sells physical, pre-installed software, it is crucial to seek legal advice on how best to ensure the enforceability of a shrink-wrap EULA. A commercial technology solicitor can advise you on how best to ensure your terms are accessible on the packaging or available online for review before purchase.
What is a Browse-Wrap Licence?
A browse-wrap licence differs from both click-wrap and shrink-wrap agreements. In this context, users are simply notified of the licence terms but are deemed to accept them simply by continuing to use the software or website.
Browse-wrap agreements can be less reliable in legal terms due to the lack of active consent.
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What are Key Considerations for Enforceability in EULAs?
How your business presents its EULA can significantly determine whether it is enforceable. Click-wrap licences are generally more enforceable because they require users to agree to the terms before proceeding explicitly. This can provide more robust protection for your business by ensuring users actively accept the contract.
Your business must, therefore, ensure users can access the EULA terms before committing to a purchase.
How Can a Lawyer Help Your Business with Software Licences?
Ensuring that your software licence is enforceable and tailored to your business’s needs requires careful thought and legal drafting, and it is vital to get this right. If you need support with this, a lawyer specialising in software licensing can assist your business by:
- drafting a tailored EULA that protects your business from risk, whether your software is distributed through digital downloads, physical media, or online platforms;
- helping you choose the appropriate type of EULA, whether a click-wrap, shrink-wrap, based on how your users access the software;
- ensuring compliance with the Consumer Rights Act 2015 and other relevant legislation reduces the risk of your EULA being challenged as unfair or unenforceable; and
- providing legal protection and enforcement mechanisms that allow your business to take legal action if users breach the terms of the EULA.
Key Takeaways
Your business needs to understand how you can structure an EULA document. A click-wrap licence requires users to actively agree to the terms of service, typically by clicking “I agree,” which makes it more likely to be enforceable. In contrast, a shrink-wrap licence is accepted when the user opens the product packaging or continues installation, relying on implied consent. This can create enforceability challenges as users may only review the terms after the purchase.
If you need help with a software licence agreement, our experienced data, privacy and IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A click-wrap licence is a type of licence where users must actively agree to the EULA’s terms by clicking an “I agree” button or ticking a checkbox. This method is generally more enforceable, as users explicitly agree to the terms before accessing the software.
A shrink-wrap licence typically presents the EULA terms inside the software packaging or during installation. Users accept the terms by opening the packaging or proceeding with the installation. However, shrink-wrap licences can face enforceability challenges if users claim they cannot review the terms before purchase.
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