What role do contracts play in data processing under GDPR?

Contracts play a crucial role in data processing under the General Data Protection Regulation (GDPR) by establishing the terms of processing and ensuring compliance with GDPR obligations. Under the GDPR, when a data controller engages a data processor to handle personal data, it is necessary to formalize this relationship through a written contract. This contract must specify the obligations of each party in relation to the data processing activities, including details such as the nature and purpose of the processing, the types of personal data involved, and the rights and obligations of both parties.

This contractual requirement is mandated by Article 28 of the GDPR, which stipulates that a data processor must only process personal data according to the instructions provided by the data controller and must implement appropriate technical and organizational measures to ensure data security. The contract also serves to provide legal assurance that data protection responsibilities are clearly defined and understood by both parties, minimizing the risk of non-compliance and potential penalties.

In contrast, informal agreements do not suffice to demonstrate compliance with GDPR, and contracts are mandatory rather than optional, especially concerning data processing activities. Furthermore, while international data transfers necessitate additional contractual safeguards (like Standard Contractual Clauses), the requirement for contracts applies to all processing activities governed by the GDPR, not just those involving