For software or software as a service (SaaS) companies, it can be a little confusing to figure out what sort of licensing contracts and legal documents you need. Here’s a brief primer on the differences between three of the more well-known legal agreements.
End-user license agreement (EULA)
An end-user license agreement, also known as a EULA, is the contract established between the licensor and the licensee of a product. The licensee likely thinks of themselves as a purchaser, but the EULA establishes their right to use a piece of proprietary software as a license – not ownership.
Terms of service (TOS)
Service-level agreement (SLA)
A service-level agreement (SLA) is a kind of contract or part of a contract between a service provider and a client. It sets out the level of service: uptime guarantees, support obligations, credit or refund policies, etc. Think of it like a customer service policy for a software service.
Different contracts for different kinds of companies, products and services
If a company is offering a service, TOS are going to be more up its alley. If it is offering a service that its customers need to be reliable, supported and consistent, then an SLA is called for. EULAs are more often applied to a single-sale, nonsubscription product. Video game companies and developers in this space tend to offer EULAs, where app providers or others tend to have TOS and potentially an SLA that sets out clear performance expectations for the service.
Typically, a TOS will not go into as much specific detail as an SLA. You can have both a TOS and SLA – TOS agreements are a bit more general. For example, Internet service providers and cloud computing providers usually establish an SLA when onboarding a new customer in order to define what services are being offered. So for instance, an Internet service provider may use an SLA to define how much time is allowed between service failures, time allowed for repairs/recovery, who’s responsible for what sort of payments in the agreement, steps for reporting issues with the service, how the service is monitored, how the agreement may be terminated, etc.
You could also have a EULA and a TOS or similar agreements. For example, a game company with a massively multiplayer online game might have a EULA, a TOS and other agreements like an Acceptable Use Policy, Terms of Sale or a User Generated Content Policy. Each of these are very specific to the products and services being offered.View all posts by this author
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