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Contract Tips for Avoiding Data Breaches – Part 2

Hopefully you have read our first blog on this topic titled Contract Tips for Avoiding Data Breaches – Part 1.” Below are more contractual provisions you should consider implementing into your vendor agreements to help ensure your confidential data is protected.

Notification Requirements

If there is a breach in security or any impermissible uses of the information, the vendor should be required to provide you with immediate notification. You may want to have the ability to investigate the breach with your own resources either on-site or remotely. Also, you will want to include a provision requiring the vendor to notify you of any governmental or other third-party requests for disclosure of information.

Subcontractors

If subcontractors are used by the vendor, you may want to be notified of or have the right to approve the use of third-parties. You may want to have access to the third-party’s security protocols and certifications.

Data Center Location

The contract should specify the geographical location of the data center. You should consult with your attorney regarding whether this could subject you to the jurisdiction of that location.

Service Level Agreements

If you have negotiated certain guarantees for access or scheduled maintenance during times that will result in minimal disruption, your contract should provide for specified monetary credits for the failure to meet such service level requirements.

Indemnification

Your contract should set forth liability limitations and the vendor’s obligation to indemnify your business for harm caused to third-parties by the vendor’s breach of confidentiality obligations, noncompliance with the law, or other similar types of conduct.

Data Breach Insurance

The contract should require the vendor to obtain adequate cyber-insurance that covers both the loss of data and the costs of responding to a data breach, which should include reasonable attorney’s fees.

There are several other contractual provisions that may be necessary for your industry or unique needs. If you are interested in learning more about protecting your business with your vendor contracts or how we can assist you with other business-related matters, contact Leslie S. Marell today.

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