Data contracts are formal agreements between a data provider and a data consumer. They abstractly describe the data as well as the exchange structure, format, and characteristics and schema of information.
Why is a data contract required? Data contracts establish guidelines and rules for data sharing, storage, deletion, or archival. Moreover, they ensure that the data is reliable, high-quality, and can be trusted by all parties involved. This can include further guidelines on if the primary data consumer can share data with a secondary consumer. It can also include ethical boundaries and constraints around data processing, privacy, and security.