GDPR Contract Review: How to Read the Fine Print

Why GDPR Contract Review Matters in 2025

Privacy is always at the top of any legal team’s priority list. But when the European Union issued its GDPR Law, it upped the ante. These standards for data privacy quickly pushed enterprises to consider their data collection and management practices more carefully.

While GDPR affects many parts of an organization, the way companies handle personal data often starts with contracts and their included terms.

But, to efficiently and proactively protect against heavy non-compliance penalties, you need to leverage advanced contracting technology that can make GDPR contract review a breeze.

Reviewing contracts for GDPR compliance is no longer optional—it’s essential. With regulatory pressure mounting and fines increasing, organizations need a structured, repeatable process to ensure every contract upholds privacy obligations. This guide outlines how legal and compliance teams can perform GDPR contract reviews efficiently—backed by automation and AI—while maintaining a strong risk posture across global operations.

In this article, we’ll walk briefly through the current GDPR guidelines (there’ve been a few changes since 2018) and how to ensure and maintain compliance through your contracts. 

What is GDPR?

You can only protect your business once you know what you’re up against. Before implementing any contracting changes, learn what this law is, how it affects your business, and the penalties you could face for non-compliance.

Understanding the EU’s GDPR Law

The General Data Protection Regulation (GDPR)is the strictest data privacy law in the world.

Put into effect in May 2018, it defines and outlines the specific rights European-based people have when it comes to how organizations collect and use their data—or data about them.  It also lays out data collectors’, processors’, and controllers’ responsibilities in protecting the information they access.

Contracting processes collect hundreds of data points about counterparties, third parties, etc. So, performing a thorough GDPR contract review and maintaining compliance can be intimidating.

The Consequences of Non-GDPR Compliance

The EU has made its stance on data privacy clear, and they’re more than willing to dole out GDPR penalties for non-compliance.

• Less severe infringements can result in a fine of 10M EUR, or 2% of your firm’s worldwide annual revenue from the preceding financial year—whichever amount is higher.
• More severe infringements can result in a fine of up to 20M EUR, or 4% of your firm’s worldwide annual revenue from the preceding financial year—whichever amount is higher.

How to Conduct a GDPR Contract Review

The key to maintaining GDPR compliance and reducing risk is through careful, clear contract review. You just need to make sure you cover all your bases.

1. Onboard a Data Protection Officer

GDPR requires some businesses that process and control relevant data to have a dedicated Data Protection Officer (DPO) to review and amend all internal documents.

You’ll need to implement a DPO if:

• You’re a non-court, public authority acting in a judicial capacity
• Your core activities require constant, large-scale monitoring of people (You’re a search engine)
• Your core activities involve large-scale processing of sensitive data listed in Articles 9 and 10 of the GDPR (Ex: a healthcare office)

2. Identify Relevant GDPR Language

Having the correct GDPR-related language in your contracts can help ensure you proactively comply with all regulations.

Review contracts to find clauses relating to:

• Data protection addendums (DPAs)
• Data protection impact assessments (DPIAs)
• Breach notifications
• Data subject rights
• International data transfers

While you can do this manually, AI contract analysis gets the job done much faster, at scale, and with less room for human error—but we’ll get to that later.

Identifying GDPR-related language is the first step—but what exactly should you be looking for?

Key GDPR Contract Clauses to Look For

To ensure airtight compliance, review contracts for the following critical clauses:

• Purpose and Scope of Data Processing – Clearly define what data is collected, why, and how it will be used.
• Lawful Basis for Processing – Specify the legal grounds for data processing, such as consent or legitimate interest.
• Data Retention Periods – Include timeframes for how long personal data will be stored and when it will be deleted.
• Subprocessor Obligations – Outline responsibilities and restrictions for third-party subprocessors handling data.
• Standard Contractual Clauses (SCCs) – Necessary for international data transfers, especially when moving data outside the EU.
• Data Breach Notification Timelines – Define how quickly each party must notify the other in case of a breach.

These clauses not only support legal compliance but also demonstrate accountability to stakeholders and regulators.

3. Address Missing Clauses

Some contracts will require updating if they don’t contain language that complies with GDPR. Review your agreements, ensure language is consistent in every existing and new contract, and add GDPR clauses where necessary.

Also, consider working with your legal department to develop standard language for GDPR compliance and save that language in a clause library. This will speed up contract negotiations since you’ll have the approved clauses on hand.

4. Track GDPR-Related Obligations

Reducing contract risk related to GDPR is not only an internal job. The external teams you work with also play a role in maintaining compliance.

Keep track of how third parties and vendors collect, store, and use data so you can proactively ensure you’re only working with compliant parties. Spotting a non-compliant supplier and addressing the issue now can save you millions later.

Even with thorough GDPR contract reviews, some common mistakes can slip through the cracks.

Common GDPR Contract Review Pitfalls to Avoid

To proactively reduce risk, watch out for these frequent contract oversights:

• Missing Subprocessor Disclosures – Failing to list subprocessors can leave you vulnerable to compliance issues.
• Outdated Standard Contractual Clauses – Ensure you’re using the most current SCCs as mandated by the European Commission.
• Vague or Incomplete Data Use Language – Ambiguous terms can lead to misinterpretation and legal exposure.
• Breach Response Gaps – Contracts should clearly define response times and responsibilities for breach handling.
• Neglected Legacy Contracts – Older agreements may not contain the necessary GDPR terms—review and update them proactively.

By avoiding these pitfalls, organizations can ensure long-term compliance and build more secure data-handling processes.

How AI Refines GDPR Contract Review

We’ve established that GDPR penalties are something no enterprise wants to face. However, reviewing thousands of contracts in your portfolio, identifying the specific agreements needing changes, and inputting those edits is not easy.

AI contract analysis allows you to perform GDPR contract reviews continuously and at scale since the technology completes tasks faster and with less room for error.

AI isn’t just a convenience—it’s a necessity when managing contract compliance at scale. Let’s look at how this plays out in practice.

Real-World Example:
A global software company used AI contract analysis to audit over 5,000 active vendor contracts. Within days, the platform flagged 1,300+ agreements missing mandatory DPA clauses and auto-routed them to legal for revision. This proactive intervention helped the company avoid a potential compliance fine of over €2 million.

By eliminating the bottlenecks of manual reviews and enabling consistent clause detection, AI drastically accelerates compliance while improving accuracy.

Here’s what that would look like:

• Simplified Legal Review – Built-in risk analytics support automated third-party contract review. Easily extract contract metadata, clauses, and obligations to streamline the review of your contract repository.
• Efficient Clause Integration – Establish a standardized library of clauses and templates that incorporate standardized GDPR and data security language. This feature enables you to swiftly draft and update existing contracts.
• Streamlined Approval Process – Use customizable workflows to smoothly navigate contract revisions through approval loops all while managing tight version control.
• Better Metadata Management – Once you digitize your contracts in a CLM, you can easily search metadata (using machine learning and NLP) for relevant language and update metadata fields as laws and regulations. You can do this across multiple contracts or complex contract packages with just a single click.

Using Contract Management to Protect Your Business

You don’t have to find out your processes aren’t GDPR compliant the hard way. Using advanced technology at your fingertips, you can proactively ensure your contracts meet GDPR standards and avoid nasty penalties.

See how Sirion’s AI contract analysis can help you manage your contract portfolio, reduce manual efforts, and ensure compliance across your entire organization. Contact us to schedule a live demo and start improving your CLM processes.

Want to make GDPR compliance a continuous process rather than a one-time check? Here’s how to operationalize it.

How to Operationalize GDPR Contract Compliance

Maintaining compliance shouldn’t be reactive—it should be built into your contract lifecycle. Here’s how to make it part of your ongoing operations:

1. Centralize Contracts – Store all contracts in a secure, searchable repository for unified visibility.
2. Automate Clause Tagging – Use AI to tag GDPR-relevant clauses and monitor for gaps or inconsistencies.
3. Standardize Language – Save approved GDPR language in a clause library to use across all templates and negotiations.
4. Integrate Third-Party Reviews – Routinely assess vendor and partner contracts for data handling risks.
5. Schedule Regular Audits – Run quarterly reviews to identify outdated contracts or changes in regulations.

Embedding these practices ensures sustained compliance, streamlines legal reviews, and strengthens enterprise-wide privacy governance.

GDPR Compliance Starts with Your Contracts

GDPR compliance isn’t just a checkbox—it’s a contractual commitment that touches every vendor, partner, and internal team handling personal data. As regulations evolve and data volumes grow, ensuring your contracts are airtight becomes critical to avoiding financial penalties and reputational damage.

By combining legal diligence with AI-powered contract analysis, organizations can review faster, reduce risk, and embed compliance across the contract lifecycle. Whether you’re auditing existing agreements or building new ones, your contracts should reflect the highest standards of privacy and protection.

Make GDPR readiness a competitive advantage—not a compliance burden.

Frequently Asked Questions