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I am not sure what exactly I am looking for here, but here are the facts:

I will be offering a free to use software, free as in $0 cost only(not OSS). I need a piece of text included in the installer with agree/disagree, that would protect my rights. Specifically that I don't guarantee anything and shouldn't be held liable for their losses that the software might cause. I want to allow them to use the software for anything they like, but not allow to redistribute, sell, or reverse engineer it.

I am not even sure whether this text is technically a license, disclaimer, or end user license agreement. I doubt there is a ready to go template for what I am looking for, but any pointers would be greatly appreciated.

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This is off-topic. I’m not a lawyer, but you’re looking for a standard-issue disclaimer, along the lines of “This software comes with no warranty, express or implied, and the author makes no representation of warranties of merchantability or fitness for a particular purpose. The author claims no responsibility for damages resulting from any use or misuse of the software”. The particulars will depend on your location and a number of other factors, I’m sure. –  Jon Purdy Jan 15 '12 at 23:21
    
Off topic hint: If you apply tags legal and software-law to your question, it's off topic (99% of the times). I removed the tags, please never use them again... Software licencing on the other hand is perfectly on topic, although almost every answer you'll get it's going to be along the lines of "I'm not a lawyer, you need to ask one" - And you should, but that doesn't mean the programmer's perspective can't be useful. –  Yannis Rizos Jan 16 '12 at 4:37
    
+1. While people might have dislike about legal stuff, i feel this is first ever question here which talks about non OSS licensing. Please don't close this. –  Dipan Mehta Jan 16 '12 at 18:09
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3 Answers

You need few things:

1. Copy right notice:
Any work originated by any author in any field first requires a proof of its author ship. This is similar to publisher putting a simple copyright text Copy right 2012, m0s . This is enough to be carried along with text file in your source or binary package. However, it is better if you have it in About dialog box or some part of display in application.

2. Warranties and liabilities and terms of support
You may want to disclaim (only since you are giving things for free) that any usage which may cause any direct or indirect harm to any individual or material is liability of the end user and not to the author.

Mind you, in the world of viruses, you may better safeguard yourself with this clause. Warranties and Liabilities are two different things; i am only giving you an overall idea. Read samples of EULA to understand. You may want to specify explicit condition, charge for support etc.

3. Information privacy
You may want to declare whether or not the application/software in any form carrying/collecting any user information in direct (such as username) or indirect form (such as statistic). And if it does, the user agrees before installing and using the application.

4. Revocation/Termination of license
You may want to put the clause that the above license can be revoked or terminated and you may decide to provide alternative license to any user after the user has downloaded it. This is necessary if you later feel that some large company is using your software and making good money!

Remember this is possible only if you are giving away something for free. If i buy something from you, i won't accept such condition.

5. Prohibitions on distribution, modification
You may put the condition that user may/may not distribute it free or otherwise and may/may not modify (such as tempering, reverse engineering etc.) to your code at all. (or without your permission.)

6. Patent disclosure
You may disclose that your given software implements the following patents. And that End user is subject to any patent liability upon use.

Again, this is only if you make download/distribution subject to condition that user agrees to such a thing. Even if you give software free, but if it infringes the patent, by default since you are making the device and distributing, you are infringing the patent; unless the end user is accepting the liability.

7. Restriction of Use
If there is any specific usage you may want to prevent. For example, use for academic but not commercial; no usage in activities related to defense - anything that may be relevant.

8. Trademarks
You may declare any of your logos, and other trademark as yours and that a. you may want disclosure if anyone using the tool. (credit) BUT b. you may want that no one uses this information in advertising the same. (See Apache license to learn more of this).

9. Jurisdiction
I don't know if this is must, but since software can travel the whole world, you may specify which countries law are applicable for the above world. This implies, that if jurisdiction is a US, and if anyone in India has a problem with this affair, they can file a suit against you in US and not in India and it can only be in terms of law of US.

NOTE: PLEASE DO NOT USE EXACT WORDS I WROTE HERE. Do your research for drafting. This is only to give you a general idea.

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µTorrent is a free program - but not OSS - you should take a look at its EULA.

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The price you charge (0$) is an economic consideration, not (directly*) a legal one. That means you don't need a special kind of license. A normal EULA will suffice.

* When it does matter in legal matters, it will be to your advantage. Your users are not entitled to high expectations given the low price - but that would still hold if you'd charge $0.99, again free is not special.

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During my investigation I found that in US there is a difference when you charge for your software, you will be taking some kind of liability for it, no matter what your EULA says. Has to do something with consumer affairs. I can't find the sources right now, but I'll link that when I do. I am not disputing your argument, I didn't even mention my location in the question, just putting it here for information purposes. –  m0s Jan 16 '12 at 12:15
    
@m0s: perhaps you're thinking of the situation in which you make something available for free, with no strings attached whatsoever. (E.g. put it on your website). In that case, anyone who takes it cannot claim that you have contractual obligations, because there's no contract. (It's digital dumpster diving). But this question specifically asks the user to agree to terms. A lawyer can use that to argue a contract exists despite the 0$ price. –  MSalters Jan 17 '12 at 9:50
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