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The ideal user agreement: how to minimize risks for developers

There are many risks in the work of software companies, but few will attribute to them an underdeveloped user agreement. However, if you approach this issue inattentively and do not take into account important details, there is a risk of encountering serious consequences in the future.

A user agreement (user license agreement or EULA, translated into Russian - a license agreement with the end user) can be defined as an agreement between the owner of the software (software) that comes with the product and the user of the software to which this product is sold.

The issue of PS is often underestimated, because it is believed that users themselves never read what they sign. So in 2018, more than 500 students easily agreed to the terms of the PS of the new social network NameDrop, which stated that each user is obligated to transfer their future children to the site. Fortunately, the NameDrop social network doesn’t actually exist - it was an experiment of two professors at American universities, which really confirmed that 98% of usersnot ready to spend your time getting acquainted with the PS.

Nevertheless, there are several reasons why it is important for the business to pay attention to the competent compilation and regular updating of the PS. First of all, this will minimize risks in the event of a conflict with users and avoid possible losses when making claims on their part. Secondly, for Russian manufacturers the correct compilation of the PS will protect against claims from the Rospotrebnadzor, which controls the legality of the processing of users' personal data. This will avoid administrative and criminal liability for violations in this area. Thirdly, with constantly changing legislation, regular updating of the PS will always keep the document up to date and avoid common legal risks both from users and from regulatory authorities.

It’s enough to recall an example when, in 2018, a Parisian court ordered Twitter to change the rules of the PS and pay a fine of 30 thousand euros. In particular, the court decision reflected that the social network can no longer use users’s photos and tweets for commercial purposes without their consent. That is why it is important for a business to know what a user agreement should include that can protect the company as much as possible from risks.

Perfect user agreement


It includes, first of all, general provisions:

  • Description of the software that came with the product,
  • indication of the possibility of updating the software,
  • an indication that the PS applies to any software updates, unless otherwise specified.

The second important point is usage restrictions. It must be indicated here that the program is not transferred to the user into the property , but is provided to him for use under a limited non-exclusive license. In addition, the consumer is not entitled to copy, decompile, disassemble, try to decrypt the structure, make changes or create derivative works based on software. The program must be used in accordance with applicable laws, including the local laws of the country or region in which it resides or in which it downloads or uses software.

The next item is the transfer of software rights. It states that the user does not have the right to rent or lease, rent, provide for a while, sell, re-distribute or sublicense the program, but can transfer it along with the transfer of ownership of the product.

Separately, you should consider obtaining consent to the use of personal information about the user by sending a reference to the company’s privacy policy. It is important to pay attention to the regulations on the use of software by minors and foreign users. With regard to third-party services, it must be indicated that the software can provide the user with access to third-party services. But the company is not responsible for the quality of such services, and the user, turning to them, acts at his own risk. Here you should definitely list the types of such services.

The action of the PS can be terminated - for example, in case of violation of its conditions by the user. In this case, the user rights on the PS automatically terminate, and he must stop using the software. But even with this scenario, some sections of the PS continue to operate - for example, paragraphs on the use of personal information of the user.

The section on applicable law and the main language contains information on which laws of the PS are regulated and interpreted in accordance with the legislation of which country. It is also prescribed here that in case of discrepancies between versions of the PS in different languages, the priority is the version in the main language.

A company entering the international market should take into account that the legislation of the Russian Federation regarding the protection of consumer rights is not so strict in comparison with the laws of the United States. Therefore, if there is a potential opportunity to sell software abroad, it is better to make a reservation about the applicable law in the text of the PS - indicate that the provisions of the document are regulated in accordance with the laws of the Russian Federation.

Also, in any PS write clauses on guarantees, damages and limitation of liability. There are a number of nuances that a startup should definitely take into account. Therefore, we dwell on these sections in more detail.

Warranty


The guarantee is in fact a statement of the quality, characteristics and performance of the software sold or access to it. The current legislation provides that a company is obliged to transfer to a user a product whose quality corresponds to a sample, description or contract of sale. And if there are no conditions on quality in such a document, the manufacturer is obliged to transfer to the user a product suitable for the purposes for which such a product is usually used. If the product does not meet the declared quality (there is a significant deficiency), the client has the right to demand replacement of the product or refuse to fulfill the contract and demand the return of the amount paid + the losses caused to him.

However, there is a wide category of obligations that the company is not obliged to provide - moreover, it must insure itself against the possible consequences of such incidents.
Therefore, the manufacturer in the clause on guarantees must necessarily reflect several such provisions. First of all, the software and any products of the company will be delivered “as is” and “as available” with all the shortcomings available, and the manufacturer does not give any guarantees in this regard.

Also, the company is not obligated to give guarantees of compatibility of its software with software, programs, products and services of third parties. And, finally, a universal point that allows you to relieve yourself of unnecessary responsibility in a wide range of cases - an indication that no oral and written information from the manufacturer and its representatives can be regarded as a guarantee .

Indemnification


Consumer losses are the expenses that the user incurred or will have to incur in connection with the sale of low-quality software bundled with the product, as well as the loss or damage to the user's property (the so-called “real damage”). The second option is the unearned income that the user would receive if they sold him software and a product of good quality (the so-called “lost profit”).

Under Russian law, a startup cannot limit the amount of such losses to a fixed amount for a user who purchases software with a product for personal use.But for such a client, a company can prescribe that it does not guarantee the compatibility of its software, products and services with software, products and services of third parties. It is also necessary to add that the manufacturer’s software, products and services are not intended for use in situations and environments in which it may cause harm to human health or death, or damage property of the user or other persons, harm the environment, etc. P. It is mandatory to indicate that if these conditions are violated, the company is exempted from compensation for any losses.

In judicial practice, there are a number of cases where a competently prescribed clause on damages in the PS helped the entrepreneur prove his innocence. For example, in 2013, the Arbitration Court of the Far Eastern District refused to recover damagesthe buyer who purchased defective goods on the TaoBao website. It follows from the user agreement that the defendant is not a seller / producer of goods, but acts only as an intermediary, and does not bear responsibility for the quality of the goods.

Limitation of liability


The main trap here is to mistakenly assume more responsibility than is prescribed by law. Even if such responsibility is not provided for by law, the company will still have to answer in accordance with the terms of the contract. Therefore, a company wishing to protect itself from such incidents must specify at least two important provisions in the clause on limitation of liability:

  1. To the extent not prohibited by applicable law, the company, its agents and distributors are not responsible for causing the user direct and indirect losses that may arise in connection with the use of the company's software, products and services.
  2. The liability of the company for causing losses to the consumer who purchases its software, products and services for conducting business, is limited to a certain amount. Here you must specify the size of such an amount.

To prevent incidents related to the use of the software being produced, it is important for startups to pay attention to the competent development of the user agreement and other documents that determine their interaction with users (for example, privacy policies).

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