Hard Drive Fail - New OS?

I have a 2007 Imac with a failed hard drive and no backup.

I have installed a new hard drive.

I have read that i can install a new OS by downloading Yosemite making a bootable installer on my other mac. My question is, what are the legalities of doing this?

Obviously the Imac had an operating system when it failed, so is it just considered an upgrade? Yosemite is free to download not sure how I could pay for it anyway??

Thanks.