What You Didn't Know About Contract Management

What is Contract Management?

Contract management, also referred to as contract administration, is the management of contracts that are created between customers, partners, vendors or employees. The field of contract management includes negotiating the terms and conditions present in these contractual agreements, while subsequently ensuring that these stipulations adhere to compliance issues designated by the underlying company or industry.

In addition, contract management entails the documenting and agreeing on all changes that may come to light during the implementation and execution of such contractual agreements.

Contract management can be best summarized as the formal process of efficiently managing the creation of a contract, along with expediting the execution and required analysis of the contract. The systematic approach of contract management is required to maximize the financial and operational capabilities and performance of the underlying parties. In addition, contract management is undertaken to mitigate the risk associated with a contractual agreement.

Contract management deals with contractual agreements that are made in a commercial setting; common forms of commercial contracts will include employment letters, purchase orders, sales invoices and utility contracts. The more complicated forms of commercial contracts will include contractual agreements regarding constructions projects, the exchange of goods or services that are regulated by a government authority or require the delivery of technical specifications, intellectual property agreements and issues revolving around international trade.

Common Areas of Contract Management:

Contract management, in the most simplistic of forms, will expedite the drawing and execution of a business contract. A business-standard contract model, as carried-out by numerous organizations throughout the United States of America will typically review and systematically inspect the following areas of business disciplines:

Baseline management

Commitment management

Authoring and negotiating the business contract

Creating a visible contract that is easily understood by both parties

Growth Contracts for sales-side contractual obligations

A contract management team will expedite the creation and delivery of numerous types of contracts, including purchasing contracts, partnership agreements, trade agreements, intellectual property agreements and sales contracts.

A purchasing contract is a legally-binding agreement between a company (the buying party) and a supplier who promises to sell products and/or services that meet the terms and conditions within the contract. The company, in return, is obligated to acknowledge the transfer of goods and services and to pay the seller for the offering.

A sales contract is a legally-binding agreement between a company (the seller) and a customer; in this contractual agreement, the company agrees to sell products or services to the customer. In return, the customer is obligated to pay for the products or services purchased.

A partnership agreement may take the form of a contract which formally establishes the terms of a partnership formation between two legal entities. A partnership agreement, in regards to contract management, may also merely reflect the desire of the parties to act is if both are forming a partnership with common goals.

NEXT: What You Must Know About Withholding Employee Wages