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Leadership and readiness

Who is the contracting party in an intermediated data deal?

By SourceX Editorial · Reviewed by Noah Loul ·

Short answer

In an intermediated data deal, the contracting party depends on the structure. In a direct license you sign with the buyer and the intermediary works beside the deal; in a sublicense chain you sign only with the intermediary; in a tri-party agreement all three sign one document. Prefer a structure that gives you enforceable rights against whoever uses the records.

Key takeaways

  • You can enforce a promise only against a party that made it to you, so check who stands at the end of the chain.
  • In a direct license, the buyer's promises on permitted use, deletion and audit run straight to the supplier.
  • In a sublicense chain, your protection depends on the intermediary flowing your restrictions down and enforcing them.
  • The payment path can differ from the contract path, so confirm who owes you money, when and through which account.
  • Assignment, change-of-control and insolvency terms decide what happens if the intermediary is sold or fails.

What are the three common structures?#

The three common structures for an intermediated data deal are a direct license with a separate services agreement, a license-and-sublicense chain, and a single tri-party agreement. Each answers one question differently: whose signature binds the party that actually trains on or evaluates with your records.

Labels are unreliable. Some intermediaries describe themselves as agents but sign as licensees, and some marketplaces use platform terms that work like a sublicense chain. Read the grant clause and the signature blocks, not the cover email.

What are the three common structures?
StructureWho signs the licenseIntermediary's roleWhat it means for the supplier
Direct licenseSupplier and buyerAgent or service provider under its own agreement with the supplierBuyer's promises run to you; your entity name is on the license
License and sublicenseSupplier and intermediary; then intermediary and buyerLicensee from you and licensor to the buyerYou rely on the intermediary to pass on and enforce your terms
Tri-party agreementSupplier, buyer and intermediary in one documentNamed party with defined duties such as preparation, delivery or payment handlingAll obligations sit in one place, but every change needs three signatures

How a direct license works with an intermediary beside it#

A direct license makes the buyer your counterparty: the grant, permitted use, deletion duties, audit rights and confidentiality obligations are promises the buyer makes to you. The intermediary signs a separate agreement with you that covers its services, its fee and any authority to negotiate.

The direct structure gives the clearest enforcement. If the buyer uses records outside the permitted use, the supplier has a contract claim against the buyer itself rather than against someone in the middle. The trade-off is visibility: your entity is a party, so protecting your identity depends on confidentiality and no-publicity terms rather than anonymity.

Check two points in the services agreement. First, whether the intermediary can bind you, and if so within which written limits. Second, whether its fee depends on signature, renewal or expansion of the license, because that shapes its incentives during negotiation.

  1. 01Your work records
  2. 02Personal details removed
  3. 03You approve the release
  4. 04Licensed to AI developers
How it works with SourceX: Your work records → Personal details removed → You approve the release → Licensed to AI developers.Illustrative

What changes in a license-and-sublicense chain?#

A license-and-sublicense chain makes the intermediary your only counterparty. You grant the intermediary a license with a right to sublicense, and the intermediary grants the buyer a sublicense whose full text you may never see.

Your protection then rests on what your agreement with the intermediary requires of every sublicense. Without those terms, misuse by the buyer may leave you with a claim only against the middle party, which may have limited assets. Watch the grant to the intermediary as well: an exclusive or open-ended grant to the middle party can stop you licensing the same records anywhere else.

  • A right to approve each sublicensee before delivery, or at least a named list of permitted ones.
  • Flow-down of permitted use, prohibited use, deletion, security and confidentiality terms at least as protective as your own.
  • Third-party beneficiary rights for the supplier in each sublicense, so you can act against the buyer directly if needed.
  • A copy of each sublicense, or a certificate of its key terms signed by the intermediary.
  • A bar on further sublicensing by the buyer.
  • An obligation on the intermediary to enforce breaches and to tell you about them promptly.

Who pays you, and when?#

The party that pays you is not always the party you signed with. In a direct license the buyer may pay the supplier while the intermediary invoices its fee separately, or the buyer may pay the intermediary, which deducts its fee and remits the balance. In a chain, the intermediary collects from the buyer and pays you under your own agreement.

When money passes through a middle party, ask for funds held in a segregated or trust account, a fixed remittance deadline, statements showing gross receipts and fees, and audit rights over the intermediary's records. Bankruptcy law also has specific rules for intellectual property licenses: under 11 U.S.C. §365(n), if a trustee rejects a license the debtor granted, the licensee may elect to keep its rights if it keeps paying royalties. Ask counsel how rules like these would play out if the middle party failed while holding your records or your money.

The payer usually handles tax reporting too. IRS instructions require payers to report royalty payments on Form 1099-MISC, so the structure can change which entity reports payments to you and how they are characterized. Take that question to your tax advisor before signing.

Which clauses decide the outcome when something goes wrong?#

The clauses that decide the outcome are permitted use, deletion, warranties, indemnities and assignment, and their effect shifts with the structure. A warranty you give an intermediary can reach further than you intended if the sublicense promises the buyer more than you promised the intermediary.

Assignment deserves particular attention because intermediaries change hands. Cloudflare announced in January 2026 that it had acquired Human Native, a London-based AI data marketplace where creators package, price and license content for AI training. Wherever an intermediary holds your license or your money, a change-of-control clause decides whether you get notice, a consent right or a right to terminate.

Which clauses decide the outcome when something goes wrong?
ClauseDirect licenseSublicense chainTri-party agreement
Permitted use breachYou enforce against the buyerYou enforce against the intermediary, which must enforce against the buyerEach party's duty is named and you can act directly
Deletion at term endBuyer certifies deletion to youBuyer certifies to the intermediary; ask for copiesBuyer certifies to all parties
Rights warrantiesYou give them to the buyerYou give them to the intermediary, which may give broader ones onwardAllocated party by party in one place
IndemnitiesBetween you and the buyerTwo separate sets that must matchDrafted per party
AssignmentBuyer's assignment rights matter mostIntermediary's assignment rights matter mostEvery party's assignment rights matter

Illustrative: a consulting firm compares two proposals#

Illustrative: a fictional management consulting firm keeps proposals, project review notes and internal playbooks in SharePoint, with engagement history in Salesforce. It received two proposals to license a de-identified set of project reviews. One intermediary offered to take an exclusive, sublicensable license and resell access to model developers it would choose. Another proposed a direct license between the firm and a named buyer, with the intermediary handling preparation and delivery under a services agreement.

The firm's general counsel ran both proposals through the same three questions: who could be sued for misuse, who would certify deletion, and who held the money between signature and payment. The first proposal routed every answer through the middle party and barred the firm from licensing the records elsewhere. The firm chose the direct structure, accepted that its name would appear in the license under confidentiality terms, and limited the intermediary's authority to a written scope the managing partners had approved.

How SourceX approaches the contracting question#

SourceX negotiates with buyers within limits the supplier approves, and the supplier approves every step of the SourceX five-step transaction: Supply, Rights, Preparation, Approval and Delivery. Records are licensed, not sold outright, and the supplier keeps ownership.

Which entities sign, and in which structure, is set out in each deal's documents and reviewed by the supplier's own counsel before signature. Whatever the structure, each package's SourceX Evidence Packet ties release authorization and permitted use back to provenance, licensing rights and the privacy record, so the path from supplier approval to buyer use is on paper.

Frequently asked questions

Can the intermediary sign the license on our behalf?

Only if you give it written authority, and only within the limits you set. A broad power to bind the company is risky, so many suppliers let the intermediary negotiate while their own authorized signer executes the license. If you do delegate, define the record families, permitted use and minimum terms the intermediary may agree to.

Does a direct license mean the buyer learns our name?

Usually, because your entity is a party to the contract. The buyer can still be bound to keep your identity and the records confidential, and publicity can be barred without your consent. If anonymity matters more than direct enforcement, a chain or tri-party structure may fit better, with stronger flow-down terms.

Which of our entities should be the licensor?

The entity that holds the records and the rights to them, which is not always the parent. After acquisitions, records may sit with a subsidiary or with a company that was later merged away. Confirm ownership before drafting, because a license from the wrong entity can leave the buyer without valid rights and the supplier with a warranty problem.

Are a marketplace's standard terms a license with the buyer?

Often not directly. Many marketplaces have suppliers accept platform terms that grant the platform rights to license onward, which works like a sublicense chain. Read the platform terms for the grant, the sublicensing right, how buyers are bound and what happens to your records if you leave the platform.

Does the structure affect how we record the revenue?

It can. Who the buyer contracts with, who sets the terms and who carries delivery and rights risk all feed into whether license revenue is recorded gross or net. Raise the structure with your accountant before signing, since the answer can also affect tax reporting and how the license reads in future diligence.

Sources

  • Under 11 U.S.C. §365(n), if a trustee rejects an executory contract under which the debtor licenses intellectual property, the licensee may elect to retain its rights to the IP for the duration of the contract and any extensions available as of right, provided it continues to make all royalty payments due. Source
  • IRS instructions require payers to report gross royalty payments of $10 or more to a payee in Box 2 of Form 1099-MISC. Source
  • Cloudflare announced in January 2026 that it had acquired Human Native, a London-based AI data marketplace founded in 2024 where creators can package, price and license their content for AI training; the purchase price was not disclosed. Source

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