What is the Purpose of a End User Agreement (EULA or SaaS Agreement)?

While this may seem basic, from the perspective of a software attorney, it is something that I often discuss with clients. If you think about it, end user agreements (whether an EULA or SAAS Agreement) are arguably more important than contracts in other industries. In most industries, the buyer purchases a tangible product they then own, or generally knows what type of services they will receive. However, in the IT world it is not that simple. As the buyer in the IT world does not ‘own‘ the product and often is unsure of exactly the type of service they will receive, I suggest that the contract is more important in this context and can be very helpful to the selling process.

Let me explain further.

1. The contract should explain/support the business model of the seller, and be 100% consistent with that model.

2.The contract should set the right expectations, so that the customer knows what they will and will not receive, and what the seller will and will not provide.

3. The buyer should be able to read and hopefully understand most of the contract without going to their attorney.

4. The contract should of course address what happens if things go wrong, but I suggest that is not the sole purpose of a contract (see 1-3 above for main purpose).

I realize this is a very simple take, but that is really the point. As a software attorney, I suggest that every IT company should take a look at their contracts and figure out their purpose.

Remember, contracts are too important to be left only to the lawyers!