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The EU General Data Protection Regulation (GDPR) takes a serious approach to contracts between parties. Whenever an organization is subject to GDPR, a data processing agreement must be signed with all the data processors relied upon.
Example of Being Subject to GDPR
In a scenario where a company is based in the US and sells software services to US citizens but also tracks and analyzes visitors from the EU, it might be subject to GDPR. Thus, the company must sign and prepare a DPA with the providers of analytics services.
What is a Data Processing Agreement?
A Data Processing Agreement (DPA) is a legally binding document required under the GDPR that is established between a data controller and a data processor. This agreement outlines the terms and conditions under which personal data will be processed by the processor on behalf of the controller. The primary objective of a DPA is to ensure that data processors handle personal data in a manner that complies with GDPR requirements, thus protecting the rights and freedoms of data subjects, also meant as clients of an organization.
Key Elements in GDPR for Data Processing Agreements (Art 28(3))
1. Subject Matter and Duration of Processing
Art. 28(3) states that the processor is obliged to explain why and for how long the data will be processed.
Example: A cloud service provider may inform that customer data will be processed during the customer’s subscription to the service, such as processing payment information.
2. Nature and Purpose of Processing
The processor needs to illustrate the processing activities and the purpose for which the data is processed.
Example: A CRM provider processes email engagement metrics such as open rates and click rates to help the client understand the effectiveness of marketing campaigns.
3. Type of Personal Data and Categories of Data Subjects
Detailed information about categories and types of processed data of the individuals.
Example: An HR company/agent processes personal data such as names, employment history, and addresses.
4. Obligations and Rights of the Data Controller
Information regarding the data controller’s rights and obligations.
Example: Any company has the right to demand that data is processed by the processor only for agreed purposes under secure conditions and that the data is protected.
5. Collaboration with Sub-Processors
Explanation of when the data controller can engage sub-processors in the data processing process and under what conditions.
Example: A web hosting company (data processor) may engage third parties for storage units after the data controller has been notified and ensured that the sub-processors comply with GDPR.
6. Assistance to the Data Controller
Information on when the data processor is assisting the controller in data processing.
Example: A payroll service provider assists the data controller by providing tools for employees to access and correct their personal data, ensuring compliance with GDPR.
7. Data Breach Notification
Conditions when the data processor has to inform the data controller about the breach without undue delay.
Example: If a cybersecurity breach occurs, the data processor must notify the data controller without undue delay, outlining the breach’s nature, affected data, and measures taken to mitigate the effects.
8. Data Processing Agreement Termination
After the end of the provision of services relating to processing, the data processor deletes or returns all the personal data to the controller.
Example: When terminating the contract with a software service provider, the provider must either delete all customer data from its systems or return it to the retailer according to the instructions of the data controller.
9. Audit and Inspections
The data controller has the right to conduct audits and inspections to verify the data processor’s compliance with the DPA and GDPR.
Example: A bank (data controller) may conduct annual audits of its data analytics provider to ensure that data processing activities comply with the requirements of the GDPR.
10. Data Transfer Provisions
Requirements for when the data can be potentially transferred outside the European Economic Area (EEA) guaranteeing compliance with GDPR.
Example: An e-commerce merchant using a customer service platform that operates servers in the US must ensure that standard contractual clauses are in place to legally transfer data outside the EEA.
11. Technical and Organizational Measures
Technical and organizational measures must be implemented to ensure data security, such as the ability to ensure the ongoing confidentiality, integrity, availability, and resilience of processing systems and services.
Example: An online app provider uses encryption, regular security checks, and strict access controls to protect personal data and ensure data confidentiality and integrity.
Why Do You Need to Sign the DPA?
Whenever an organization hires or partners with a third-party data processor and processes data of EU citizens, it will be asked to sign the DPA. The DPA agreement helps to protect the data of EU individuals.
What is an Agreement or Addendum for Startups in the Context of B2B?
An Agreement or Addendum for Startups in the context of B2B refers to a supplementary document added to the primary contract or agreement between a startup company and its business partner or customer. This addendum is crucial for clarifying, modifying, or adding specific terms and conditions that were not fully detailed in the original contract.
Why Do You Need an Addendum to Close a Deal in B2B Sales?
Customization
Startups often have their unique ways of doing things, which may require specific agreements. An addendum allows you to customize the deal to address the specific needs and concerns of both the startup and the business partner.
Clarification
It’s important to ensure that both parties are on the same page and understand all the terms of the deal. This helps avoid any confusion or disagreements, especially for startups that might have innovative or unconventional business models.
Flexibility
Startups are constantly evolving, and they may need more flexible terms when it comes to things like payment schedules, deliverables, or other obligations. An addendum gives them the flexibility they need, making the deal more appealing to potential partners.
Legal Protection
An addendum is a great way to protect the startup’s interests. It clearly defines the responsibilities, rights, and expectations of both parties, reducing the risk of any legal issues arising later on.
Enhanced Negotiation
An addendum is a useful tool for negotiation. It allows both parties to address specific concerns or issues and come to a mutually beneficial agreement. This is crucial for closing deals because it shows that the startup is open to accommodating the partner’s needs.
Trust Building
By using an addendum to address all the details of the partnership, a startup can build trust with its business partner. It demonstrates a commitment to transparency and thoroughness, which goes a long way in establishing a strong working relationship.
Our Recommendation
The best way for a scalable DPA, which will save time and money, is to draft one and put it on your website in downloadable form for a customer or vendor willing to sign it. This way, the DPA can be downloaded and executed in an opt-in manner, without the necessity of lengthy negotiation and back and forth. If you need such a DPA, we can assist you with this. Contact us here.
By following these guidelines, your startup can ensure compliance with GDPR and build strong, trust-based relationships with business partners, facilitating smoother and more secure B2B transactions.
