FAR 52.232-39—Unenforceability of Unauthorized Obligations.
Plain-English Summary
FAR 52.232-39 addresses a specific but important risk in commercial software and online service acquisitions: unauthorized indemnification obligations hidden in end user license agreements (EULAs), terms of service (TOS), or similar click-through or browse-wrap agreements. The clause makes clear that if such an agreement requires the Government or a Government-authorized end user to indemnify the contractor or another party in a way that would violate the Anti-Deficiency Act, that obligation is unenforceable against the Government. It also states that the Government is not deemed to have accepted those terms merely because they appear in the license or because someone clicks “I agree” or uses the service. In practice, the clause protects agencies from being bound by private contract terms that exceed federal authority, while still allowing acquisitions of commercial supplies and services that come with standard license terms. It also preserves a narrow exception for indemnification that is expressly authorized by statute and specifically approved under applicable agency regulations and procedures. For contracting officers and contractors, this clause is a reminder to review EULAs and TOS carefully, identify any indemnity language early, and ensure the contract record and ordering process do not inadvertently accept prohibited obligations.
Key Rules
Unauthorized indemnity is unenforceable
If a EULA, TOS, or similar agreement requires the Government to indemnify the contractor or another party in a way that would create an Anti-Deficiency Act violation, that clause cannot be enforced against the Government.
No implied acceptance by use
The Government and Government-authorized end users are not considered to have agreed to the prohibited clause just because it appears in the license or service terms. Mere inclusion in the agreement does not make it binding.
Click-wrap does not bind the Government
An “I agree” click box, browse-wrap notice, or similar electronic acceptance mechanism does not bind the Government or its authorized users to the prohibited indemnity term.
Prohibited term is stricken
The offending indemnification language is treated as if it were removed from the EULA, TOS, or similar agreement, leaving the rest of the agreement in place to the extent it is otherwise valid and applicable.
Statutory indemnity exception
The clause does not bar Government indemnification that is expressly authorized by statute and specifically approved under applicable agency regulations and procedures. This is a narrow exception, not a general permission.
Applies to supplies and services
The clause applies when any supply or service acquired under the contract is subject to a EULA, TOS, or similar legal instrument, so it is relevant to commercial software, cloud services, online platforms, and other licensed offerings.
Responsibilities
Contracting Officer
Review EULAs, TOS, and similar agreements for indemnification language before award or acceptance. Ensure prohibited indemnity terms are not treated as binding, and coordinate any needed legal or policy review when a statutory indemnity exception is claimed.
Contractor
Do not rely on EULA or TOS indemnity provisions to bind the Government. Remove, revise, or segregate unauthorized indemnification language and ensure the commercial offering can be provided without requiring the Government to accept prohibited terms.
Government Authorized End User
Use the supply or service only within the scope of the contract and agency authorization. Do not assume that clicking through or using the product accepts indemnity or other prohibited terms on behalf of the Government.
Agency Legal/Policy Officials
Determine whether any claimed Government indemnification is expressly authorized by statute and specifically approved under agency regulations and procedures. Advise contracting personnel on whether the exception in paragraph (b) applies.
Agency
Maintain acquisition and approval procedures that prevent unauthorized indemnification commitments and ensure that any statutory indemnity authority is used only when properly authorized.
Practical Implications
This clause is especially important for software, SaaS, cloud, and online subscription purchases, where vendors often present standard click-through terms that include broad indemnity language.
A common pitfall is assuming that a user’s click on “I agree” or routine use of the service makes all terms enforceable; under this clause, prohibited indemnity terms are not binding on the Government.
Contracting officers should identify EULA/TOS issues early, because these terms may be embedded in vendor portals, renewal flows, or post-award account setup rather than in the main contract document.
Contractors should not treat the Government like a private commercial customer for indemnity purposes; if the offering cannot be provided without the prohibited clause, the issue must be resolved before performance.
The narrow statutory exception should be used cautiously and only with clear legal and regulatory support, since unauthorized indemnification can create Anti-Deficiency Act exposure.
Official Regulatory Text
As prescribed in 32.706-3 , insert the following clause: Unenforceability of Unauthorized Obligations (Jun 2013) (a) Except as stated in paragraph (b) of this clause, when any supply or service acquired under this contract is subject to any End User License Agreement (EULA), Terms of Service (TOS), or similar legal instrument or agreement, that includes any clause requiring the Government to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an Anti-Deficiency Act violation ( 31 U.S.C. 1341 ), the following shall govern: (1) Any such clause is unenforceable against the Government. (2) Neither the Government nor any Government authorized end user shall be deemed to have agreed to such clause by virtue of it appearing in the EULA, TOS, or similar legal instrument or agreement. If the EULA, TOS, or similar legal instrument or agreement is invoked through an "I agree" click box or other comparable mechanism (e.g., "click-wrap" or "browse-wrap" agreements), execution does not bind the Government or any Government authorized end user to such clause. (3) Any such clause is deemed to be stricken from the EULA, TOS, or similar legal instrument or agreement. (b) Paragraph (a) of this clause does not apply to indemnification by the Government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures. (End of clause)