💡 Plain English Explanation

Export control clauses address the handling of technical data and information that is subject to U.S. export control laws, primarily the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). These regulations control the export of defense articles, dual-use items, and related technical data to foreign persons and countries.

Under these laws, an "export" includes not only shipping items abroad but also disclosing technical data to foreign nationals within the United States (a "deemed export"). This means that simply showing controlled technical drawings to a foreign employee or consultant could constitute an illegal export without proper authorization.

Key export control concepts:

⚠ Why This Clause Matters

Criminal and Civil Penalties: Export control violations can result in criminal penalties up to 20 years imprisonment and $1 million per violation (ITAR), or up to $300,000 per violation (EAR). Civil penalties can reach $500,000+ per violation. Companies can be debarred from government contracting and lose export privileges entirely.

For the Disclosing Party: Proper export control clauses ensure recipients understand their obligations and prevent unauthorized disclosures that could create liability for both parties. As the source of controlled information, you may face enforcement action if your information is improperly exported by a recipient.

For the Receiving Party: Understanding export restrictions helps you implement proper access controls, screen personnel, and avoid inadvertent violations. Many violations occur not from intentional misconduct but from failure to recognize that information was export-controlled.

Compliance Programs: Both DDTC and BIS expect companies handling controlled items to maintain formal export compliance programs, including training, screening, and record-keeping procedures.

📄 Clause Versions

Balanced Version: Standard export control provisions with mutual obligations, clear identification requirements, and reasonable compliance expectations. Appropriate for most defense-related transactions. 
EXPORT CONTROL COMPLIANCE

1. Export-Controlled Information. The parties acknowledge that Confidential Information disclosed under this Agreement may include technical data, software, or other information subject to export control under:
   (a) The International Traffic in Arms Regulations (ITAR), 22 CFR Parts 120-130;
   (b) The Export Administration Regulations (EAR), 15 CFR Parts 730-774; or
   (c) Other applicable export control laws and regulations.
Such information is referred to herein as "Export-Controlled Information."

2. Identification of Controlled Information. The Disclosing Party shall identify Export-Controlled Information at the time of disclosure by:
   (a) Marking written materials with applicable export control classifications (USML category, ECCN, or EAR99);
   (b) Including appropriate export control legends and warnings; and
   (c) Providing oral notice for verbal disclosures, followed by written confirmation within ten (10) days.

3. Compliance Obligations. The Receiving Party shall:
   (a) Handle Export-Controlled Information in compliance with all applicable export control laws;
   (b) Not export, re-export, or transfer Export-Controlled Information without required licenses or authorizations;
   (c) Not disclose Export-Controlled Information to foreign persons (including foreign national employees) without appropriate authorization;
   (d) Maintain records of all access to Export-Controlled Information; and
   (e) Implement appropriate access controls to prevent unauthorized disclosure.

4. U.S. Person Requirement. Unless otherwise authorized, access to ITAR-controlled technical data shall be limited to "U.S. Persons" as defined in 22 CFR 120.62, which includes U.S. citizens, lawful permanent residents, and protected persons.

5. Screening Obligations. The Receiving Party shall screen all individuals and entities with potential access to Export-Controlled Information against:
   (a) The Consolidated Screening List maintained by the U.S. Government;
   (b) Other applicable denied parties lists; and
   (c) Country-based restrictions applicable to the specific controlled items.

6. Voluntary Disclosure. In the event of any known or suspected unauthorized export or disclosure of Export-Controlled Information, the Receiving Party shall:
   (a) Immediately notify the Disclosing Party;
   (b) Conduct an investigation and implement corrective actions; and
   (c) Consider whether voluntary disclosure to the applicable regulatory agency is warranted.

7. Regulatory Changes. Both parties shall monitor for changes in export control regulations that may affect the classification or handling of disclosed information and shall promptly notify the other party of any material changes.

8. No License Grant. This Agreement does not grant any license or authorization to export, re-export, or transfer any Export-Controlled Information. Any required export licenses remain the responsibility of the exporting party.
Disclosing Party Favor: Comprehensive export control requirements with strong representations, compliance program requirements, audit rights, and indemnification. For highly sensitive ITAR or EAR-controlled technology. 
EXPORT CONTROL COMPLIANCE

1. Export Control Acknowledgment. The Receiving Party acknowledges and agrees that:
   (a) Confidential Information may include technical data, defense articles, defense services, or dual-use items controlled under ITAR, EAR, or other export control regulations;
   (b) Unauthorized export or disclosure of such information may constitute a federal crime;
   (c) The Receiving Party accepts full responsibility for export compliance; and
   (d) Any violation may result in immediate termination of this Agreement and disclosure rights.

2. Representations and Warranties. The Receiving Party represents and warrants that:
   (a) It is not owned or controlled by foreign persons or foreign governments;
   (b) It is not listed on any U.S. Government denied parties list;
   (c) It has not been convicted of or debarred for export control violations;
   (d) It maintains an export compliance program appropriate for the controlled items involved;
   (e) It has personnel trained in export control compliance;
   (f) All personnel who will access Export-Controlled Information are U.S. Persons or hold required export authorizations; and
   (g) It will promptly notify the Disclosing Party of any change in these representations.

3. Comprehensive Compliance Program. The Receiving Party shall maintain an export compliance program that includes:
   (a) Written policies and procedures for handling export-controlled information;
   (b) A designated empowered official or export compliance officer;
   (c) Regular export control training for all relevant personnel;
   (d) Screening procedures for all personnel, customers, and partners;
   (e) Access controls limiting export-controlled information to authorized U.S. Persons;
   (f) Record-keeping systems meeting regulatory requirements;
   (g) Internal audit procedures; and
   (h) Procedures for investigating and reporting potential violations.

4. Access Restrictions. The Receiving Party shall:
   (a) Limit access to ITAR-controlled information exclusively to U.S. Persons;
   (b) Maintain a current list of all individuals with access to Export-Controlled Information;
   (c) Verify U.S. Person status through documentary evidence (passport, birth certificate, green card);
   (d) Implement physical and electronic access controls;
   (e) Prohibit storage of Export-Controlled Information on cloud services or servers outside the U.S.;
   (f) Prohibit access from outside the United States without written authorization; and
   (g) Terminate access immediately upon any change in an individual's status or eligibility.

5. Prior Approval for Foreign Disclosure. The Receiving Party shall not disclose Export-Controlled Information to any foreign person, foreign government, or foreign entity without:
   (a) Prior written authorization from the Disclosing Party;
   (b) All required export licenses or agreements from DDTC or BIS; and
   (c) Compliance with all license conditions and provisos.

6. Audit Rights. The Disclosing Party shall have the right to:
   (a) Audit the Receiving Party's export compliance program;
   (b) Verify access controls and personnel screening;
   (c) Review export control records and training documentation;
   (d) Interview personnel with access to Export-Controlled Information; and
   (e) Conduct such audits without prior notice when there are reasonable grounds for concern.

7. Incident Reporting. The Receiving Party shall report to the Disclosing Party within twenty-four (24) hours:
   (a) Any known or suspected unauthorized access, export, or disclosure;
   (b) Any inquiry from DDTC, BIS, or other regulatory authority;
   (c) Any change in corporate structure affecting foreign ownership or control;
   (d) Any change in the U.S. Person status of personnel with access; and
   (e) Any other event that may affect export compliance.

8. Indemnification. The Receiving Party shall indemnify, defend, and hold harmless the Disclosing Party from all claims, damages, fines, penalties, costs, and expenses (including attorneys' fees) arising from the Receiving Party's violation of export control laws or this Section.

9. Termination for Violation. Any violation of export control obligations shall constitute a material breach entitling the Disclosing Party to immediate termination without notice and all available remedies at law and equity.
Receiving Party Favor: Reasonable export control provisions with clear marking requirements, shared responsibility, and limited liability. Requires disclosing party to identify controlled items. 
EXPORT CONTROL COMPLIANCE

1. Identification Obligation. The Disclosing Party shall be responsible for:
   (a) Determining whether Confidential Information is subject to ITAR, EAR, or other export controls;
   (b) Clearly marking all Export-Controlled Information with applicable classifications and control markings;
   (c) Providing written notice of export control status prior to disclosure;
   (d) Specifying any restrictions on foreign person access; and
   (e) Identifying the regulatory authority and relevant classification (USML category, ECCN).
The Receiving Party may rely on the Disclosing Party's classification determinations.

2. Conditional Compliance. The Receiving Party's export control obligations apply only to information that:
   (a) Is clearly and specifically identified as export-controlled at the time of disclosure;
   (b) Bears appropriate export control markings; and
   (c) Is accompanied by handling instructions sufficient to enable compliance.
Information not properly identified shall be treated as uncontrolled commercial information.

3. Standard Compliance Measures. For properly identified Export-Controlled Information, the Receiving Party shall:
   (a) Handle the information in accordance with its established export compliance procedures;
   (b) Limit access to appropriately authorized personnel;
   (c) Not export or re-export without required authorizations; and
   (d) Maintain records as required by applicable regulations.

4. No Extraordinary Measures. The Receiving Party shall not be required to:
   (a) Implement compliance measures beyond industry standard practices;
   (b) Obtain export licenses on behalf of the Disclosing Party;
   (c) Modify its existing IT infrastructure or access control systems; or
   (d) Terminate existing employees based solely on national origin.

5. Foreign National Employees. The Receiving Party may employ foreign nationals who access EAR-controlled information under applicable license exceptions. For ITAR-controlled information, the Receiving Party shall implement appropriate access controls but shall not be required to exclude foreign nationals from unrelated work.

6. Mutual Cooperation. Both parties shall cooperate in:
   (a) Obtaining necessary export licenses or agreements;
   (b) Responding to regulatory inquiries;
   (c) Investigating potential violations; and
   (d) Implementing corrective actions.
Neither party shall make voluntary disclosures to regulatory authorities without consulting the other party.

7. License Support. If the Disclosing Party requires the Receiving Party to obtain export authorizations, the Disclosing Party shall:
   (a) Provide all technical data necessary for license applications;
   (b) Support the application with required commodity jurisdiction or classification requests;
   (c) Bear the costs of license applications; and
   (d) Provide reasonable time for license processing before requiring access.

8. Limitation of Liability. The Receiving Party's liability for export control violations shall be limited to:
   (a) Violations resulting from the Receiving Party's gross negligence or willful misconduct;
   (b) Direct damages only, excluding consequential or punitive damages; and
   (c) The greater of fees paid under this Agreement or $250,000.
The Receiving Party shall not be liable for violations resulting from the Disclosing Party's failure to properly identify or mark controlled information.

9. Regulatory Defense. Each party shall be responsible for its own defense in any regulatory enforcement action, provided that the parties shall cooperate and not take positions adverse to each other absent a genuine conflict of interest.

💬 Key Considerations