10 Ridiculous EULA Clauses, and the Enterprise Ones That Cost Real Money

Nobody reads an end user licence agreement. We scroll to the bottom and click “I accept”, and that is how some remarkable clauses have ended up agreed to by millions of people. Chris Hoffman collected ten of the best in a much-shared list at MakeUseOf, which is worth reading for the laughs.

Some of those clauses are funny. The ones in enterprise software contracts are not, because they are where the money is. Here are five famous consumer examples, and five clauses in business licence agreements that cost real money when nobody reads them.

In short

• The famous ones include iTunes forbidding nuclear weapons development, Chrome’s first licence claiming rights over everything you posted, and a developer tool allowing unannounced audits of your premises.
• The expensive ones are in business contracts: audit rights, terms that change by reference to a web page, licence metrics with unusual definitions, limits on transferring licences in a merger, and the way support is repriced.
• The lesson is the same for both: what you clicked or signed is binding until someone reads it, and in enterprise software that someone should be you, before the vendor’s auditors.

Five famous consumer clauses

1. No nuclear weapons with iTunes

Apple’s iTunes terms prohibited using the software to develop or produce missiles or nuclear, chemical or biological weapons. It is a standard export-control clause, carried into a music player, and it remains the most quoted line in any licence agreement.

2. Chrome’s licence to everything you posted

When Google launched Chrome in 2008, its terms gave Google a perpetual, worldwide licence to reproduce and publish any content you submitted or displayed through the service. The clause had been copied from Google’s general terms. Google removed it within days of the launch, after the reaction.

3. Audits at any hour

A Microchip development tool’s licence allowed the company’s representatives to inspect a licensee’s premises, announced or unannounced, at any time, to check use of the software. In theory, a knock on the door at three in the morning.

4. No class actions

When Sony updated the PlayStation Network terms in 2011, users agreed to resolve disputes individually, giving up class actions unless they opted out by posted letter. Other vendors added similar waivers.

5. Terms that change at any time

Many licences let the vendor change the terms whenever it likes, with continued use counting as acceptance. What you read when you clicked is not necessarily what binds you today.

Five enterprise clauses that cost real money

6. The audit clause

Almost every enterprise licence gives the publisher the right to audit your use. Oracle’s standard clause allows an audit on 45 days’ written notice and requires you to pay any shortfall within 30 days of the findings. Audits are where licence clauses turn into invoices, which is why our audit defense work starts with reading this clause.

7. Policies incorporated by reference

Some contracts point to a web page of policies that the vendor can update. Others do not, but the vendor applies its policies anyway. Oracle’s partitioning policy, which counts every host in a VMware cluster, is not in most Oracle contracts, yet it is the starting point of most Oracle audit claims on VMware. Knowing which rules are in your contract and which are only policy is worth a great deal of money.

8. Metrics with surprising definitions

A licence metric is a definition, and definitions can be generous to the vendor. Oracle’s Java subscription counts “employees” to include part-time and temporary staff and contractors who support the business, whether or not they use Java. Oracle’s “processor” is a calculated number, not a chip.

9. Licences that do not move with the business

Many enterprise licences cannot be transferred without the vendor’s consent, and some are limited to the legal entities named in the contract. After a merger or a divestment, licences may not cover the new structure, which is one reason acquisitions are a common trigger for audits.

10. Support that is repriced when you reduce

Annual support is usually a percentage of the licence price, 22% in Oracle’s case. Dropping part of a licence set to cut support does not always reduce the bill, because some publishers reprice the support on what remains. The clause that matters is often in the support policy, not the licence agreement.

Read before you click, and before you sign

Consumer licences rarely matter in practice. Enterprise licences always do. Every contract, order and policy that governs your software decides what an audit can claim and what a renewal can cost. If no one in your organisation has read them recently, that is the first thing to fix. Our guide to publisher rights explains what vendors can and cannot do under your contracts.

Questions we are asked about licence agreements

Are EULAs legally binding?

Generally yes, though enforceability varies by country and some clauses may not survive a court challenge. In business contracts, the signed agreement and its orders are binding and are what audits rely on.

What is the most unusual EULA clause?

The best known is Apple’s iTunes terms forbidding the use of the software to develop nuclear, chemical or biological weapons, a standard export-control clause in an unexpected place.

Which licence clauses matter most in enterprise software?

The audit clause, the licence metrics and their definitions, any policies incorporated by reference, transfer and entity restrictions, and the support terms, including how support is priced when you reduce licences.

If a vendor is quoting a clause at you, talk to us before you reply.