Are End User License Agreements Fair When Terms Are Not Revealed Until After Purchase?

The practice of using end user license agreements (EULAs), particularly shrink-wrap agreements (also known as click-wrap licenses), has sparked intense debates regarding fairness and transparency. These agreements govern the use of software and are legally binding, but many consumers are not aware of the terms until after they have purchased and activated the software. This article explores the legal and ethical implications of this practice and offers insights into alternative solutions.

Legal Standing of Shrink-Wrap Agreements

Ironically, it was a judicial decision from a state known for its practical approach, Missouri, that declared such agreements as valid. In the U.S., the case of Davidson Associates Inc. v. Internet Gateway (334 F. Supp. 2d 1164 E.D. Mo. 2004) established the legality of these agreements. The court ruled that software users implicitly consent to the terms when they activate and use the software. However, the decision also recognized the right to return the software for a refund if the terms are not agreed upon, provided that the purchase is refunded accordingly.

Modern Activation Processes and Fairness

Today, the majority of software comes with an activation key or a similar online registration process. This ensures that the software has been activated and used. Absent this activation, the software can typically be returned for a refund. It is fair to argue that these measures provide a level of transparency and choice to the consumer. Unless activation is required, the software is considered unactivated and can be returned under the terms of the purchase agreement.

Consumer Rights and Fairness

Many consumers advocate for the right to be aware of the terms and conditions before making a purchase. In reality, it is quite common for software publishers to have the terms and conditions readily available. You can usually find them on the publisher's website, on the purchase page, or through a request to the publisher before making the purchase. This practice allows consumers to review the terms and conditions before agreeing to them.

It is important to note that in many cases, you are not charged for the software until you activate and agree to the terms. Therefore, it is fair that you do not know the exact terms until after purchase, as the risk and losses are minimized for the consumer.

Alternative Solutions for Fairness

Some consumers argue that it is unfair to receive the terms and conditions only after the purchase has been made. This view emphasizes the need for transparency and full disclosure before purchasing.

To address this, a workable situation could involve the following steps:

Early Disclosure: Software publishers should make the terms and conditions available on their websites and on the purchase page, allowing consumers to review them before making a decision. More Visible Agreement Options: Provide a clear and easily accessible option for consumers to indicate their agreement to terms and conditions during the purchase process. Online Activation Process: Utilize an online registration process that requires explicit consent to the terms. Ensure that this process is user-friendly and includes a clear summary of the terms before final activation.

By implementing these measures, software publishers can strike a balance between the legal requirements of EULAs and the fair expectations of consumers. Transparency and consumer rights should be prioritized to create a more equitable experience for all parties involved.