Purpose of Processing

Contract Type:
Generic Contract

The Purpose of Processing personal data under this Agreement is the performance of the contract between the Parties.


Here is a plain English explanation of the Purpose of Processing clause:

- This clause identifies the allowed reason for processing personal data under the contract.

- It states the purpose is to perform the contract between the parties.

- This links data processing directly to carrying out the agreement.

- It limits processing to activities necessary for contract performance.

- The parties cannot use the data for other unrelated purposes.

- Defining a contractual purpose for processing personal data is required under data protection laws.

- It ensures processing only occurs when necessary to fulfill the contract.

- This protects personal data and minimizes privacy risks.

- Having an explicit, restricted purpose provides clear guidance for the parties handling personal data under the contract.

History of the clause (for the geeks)

Defining permitted purposes for data processing has long been a core principle of privacy laws. ‚Äç

The first major data protection regime was Sweden's Data Act of 1973 which required processing personal data only for specified legitimate purposes.

In 1980, the Organisation for Economic Co-operation and Development (OECD) published its Privacy Guidelines which became highly influential globally. They established purpose specification as a fundamental requirement for lawful data processing.

The European Union's 1995 Data Protection Directive codified purpose limitation into EU law. It mandated personal data must be collected for explicit, legitimate purposes and not processed in ways incompatible with those purposes. This purpose specification principle was incorporated into the UK's Data Protection Act 1998.

The EU's General Data Protection Regulation (GDPR), effective from 2018, further entrenched purpose limitation requirements. Under GDPR, data controllers must have clear, defined purposes for processing. Contracts that process EU residents' personal data must now specify purposes and link processing to contractual performance.

Looking ahead, lawful processing requires restricting data use to only what is necessary for the specified purpose.

As data privacy laws continue to evolve, contractual purpose limitation clauses will remain essential to ensure data processing aligns with user expectations and regulatory obligations.