Key Difference: EULA, which stands for end-user license agreement, is a type of license agreement that details how a product or service can and can’t be used. Terms of Use are a set of rules and regulations that the user must agree to in order to be able to use a product of service.

EULA and Terms of Use are two different legal documents that are commonly used today. Both are types of documents that one needs to agree to in order to be able to use the product or service provided. In many instances, if one does not agree to these terms, they cannot use the agreement.

Both EULA and Terms of Use are types of agreements, which is why many people mistakenly believe that they are the same thing. However, the two are very different. In fact, some companies prefer to use both for added coverage; whereas, others choose to incorporate the terms of use within the EULA.

EULA, which stands for end-user license agreement, is a type of license agreement that details how a product or service can and can’t be used, as well as any other impositions that the manufacturer chooses to place on the user, such as not to share the software with others, etc. The EULA is a legal agreement between the manufacturer and the purchaser or user that establishes the purchaser’s or user’s right to use the software, as well as the manner he may use it in.

Terms of Use are a set of rules and regulations that the user must agree to in order to be able to use a product of service. They provide a set of guidelines that must be followed. Failure to follow these guidelines may result in the user being blocked from accessing or using the service. They are usually broader in scope as they can incorporate any and all aspects of the app, whereas EULA is generally limited to how the product should be used. Terms of Use are also commonly known as Terms of Service and Terms and Conditions.

Ideally, EULA is used for license of copyrighted software, while terms of use are used for provision of services. Basically, EULA is used for software and software apps that need to be downloaded either on your computer or phone, or need to download part of their software, whereas Terms of Use is more commonly used by websites and apps, that users can use without downloading proprietary software. Terms of Use are also commonly used for software as a service (SaaS), eg Facebook, Instagram, Dropbox, etc.

A good rule of thumb is that software that needs to be downloaded and provides user with a copy of the software or product, should have a EULA, whereas products that need not be downloaded, do not provide the user with a copy of the software, but do communicate with servers should have a Terms of Use.

The EULA is a legally binding contract that the company and the user enter into. People have to indicate that they agree, either by signing a document or checking a box saying that they agree to the EULA.

The Terms of Use Agreement can be legally binding and can be used to prosecute either party, i.e. the company or the user, if they breach the agreement. Like the EULA, the Terms of Use Agreement must be signed or agreed upon. However, many websites and app instead use the terms of use as a disclaimer, which need not be signed, to let their audience know what behavior and language they can use while using this website or app. These terms of use may also let the audience know about the company’s rules and guidelines.   

Comparison between EULA and Terms of Use:

Reference: Wikipedia (EULA and Terms of Use), Webopedia, SearchCIO, 
Terms Feed, Answers by LawTrades
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