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The contract workflow: From passive to active
Who says legal contracts have to be boring and repetitive? That legal documents must be presented in plain language, lengthy, detailed and in black and white? No one We were simply taught to do things this way, and we got used to it and socialized based on that path.
Have you ever observed that when you write Contractual clauses Choose strange words that you would never use otherwise? Words that were probably not commonplace even then, but were used perhaps decades ago. What then justifies their inclusion in contracts?
Effective and engaging communication methods, such as playing with language, graphics, and images, are used all around us, but the same principles do not reach the legal realm. Black font on a white background, small font size and tight line spacing — a plethora of documents that make you yawn and wish the topic had already been removed from the agenda so you could get down to business. Contracts still work the same way.
But it doesn't have to be this way. Contracts can be presented in an interesting way and regarded as an essential part of the business and customer relationship. Contracts can strengthen trust, serve as a reliable channel of communication, and help parties achieve their goals. However, this requires the How contracts are created to change.
What is the contract experience?
Contract experience covers the entire Life cycle of a contract, which both parties to the contract perform during the negotiation. A contract life cycle consists of multiple phases and can take a lot of unnecessary time and effort across multiple departments if the experience isn't properly optimized.
To create attractive contracts, we must first go through the basic features that should always be considered when drafting contracts. The 10 phases are briefly outlined below and how to ensure that each step is carried out effectively.
The stages of a contract
1. Determine whether all parties can agree to a contract
It is pointless to draw up a contract if it is not enforceable by all parties. This guideline is intended to protect people who lack experience and understanding in a particular scenario from exploitation. This means that if they decide to sign a contract, it is not legally binding.
2. Set the consideration for the contract
The phrase “consideration” describes what is being traded as a result of the contract. Any other promise to pay or the provision of goods or services could be used in return. The creation or design of a work, the development of software, the transfer of ownership of a car or a house, or the mere payment of money are some examples.
Make sure you always explain your considerations. Without them, an agreement is not enforceable.
3. Define the terms of the contract
Once the contract parameters are agreed upon, all parties should be able to achieve the desired end result, which must be achieved without ill intent. This precludes any attempt at trickery.
The terms of the contract also specify the time limits for consideration. Here is an example of a contract clause: Unless (insert name) does not expressly allow a shorter period of time in writing, the contractor will keep these books and documents for (insert name) at least six years after the contract expires.
4. Use a confidentiality clause where necessary
Contract drafting often involves intellectual property such as trade secrets or other sensitive information, which is why a confidentiality clause is recommended.
A confidentiality clause confirms the transfer of sensitive information and ensures that both parties take precautions to protect the confidential information. This helps to maintain confidence in the execution of the contract.
5. Inclusion of a contract termination clause
Each contract must include a mechanism for its termination. In the case of one-time transactions, the contract ends when the requirements of both parties are met. If it is a permanent contract, an end date must be set or described how one of the parties can end the contract.
Here you can also find information in case someone breaches the contract, i.e. they do not comply with the terms of the contract after signing. In addition, you must provide for dispute resolution provisions in the event of a breach of contract.
6. Check whether the contract complies with the law
Whatever your contract entails, you should be sure that it was drafted in accordance with relevant laws. If this is not the case, either part or all of the contract is unenforceable. It is possible to specify in a contract according to which law it should be interpreted.
7. Use the last page to enter signatures and data
A contract is only considered concluded if it is in writing and signed by both parties. Before the contract is signed, both parties should be aware of all contract terms; if one of the parties is uncertain about a condition, it should seek legal advice.
8. Offer the contract for approval
The next steps are extremely simple. The other party can accept or reject the contract as soon as it has been drawn up and offered to it. If she approves, you can proceed with the signing. Otherwise, you are free to make a counteroffer.
If the other party makes a counteroffer to your initial draft contract, you have two options: You can accept the counteroffer or make your own counteroffer.
9. Negotiate contract terms
You have the option to accept a counteroffer or make your own if one is made. Until a final offer, which both parties can agree on, has been discussed, there is often such an exchange of proposals. For any counteroffer, the entire contract should be reviewed to ensure that any changes have been understood.
10. Sign the contract
Without the signature of each party, a contract is neither binding nor enforceable. They should require all parties involved to sign and date the contracts once a final offer has been accepted by all parties. This concludes the process of creating a contract.
It doesn't really matter who signs first or last, as the order of signing is not beneficial to either party. After signing the contract, each party — or both — should receive a copy.
Why should you care about a good contract experience?
Contract management is an important process that is still done by hand in an astonishing number of companies. 95 percent of companies worldwide manage contracts on desktop computers or, worse still, on paper. These stumbling blocks in Contract workflow force companies to prioritize administrative tasks over strategic growth, which limits their ability to generate revenue.
So what is the solution to provide a great contract experience? The clear answer is to digitize the process.
Let's explore some of the benefits of switching to digital contracts and how this could help your business.
Traditional contracts take time, but digital contracts don't
- Contract negotiations are a crucial phase in the business world, which requires numerous revisions. It takes a long time to complete the printing and scanning routine. Another disadvantage is that personal meetings take up a lot of valuable time for both parties. This is not the case with electronic documents; digitization makes negotiations much easier. The contracting parties can receive, view and sign contracts at any time and from any location.
Digital contracts are less prone to errors than traditional contracts
- The traditional processing of contract transactions can lead to discrepancies for both sides, as the probability of errors or manipulation increases. This leads to legal disputes and other circumstances in which one or both sides have no legal recourse. Digital contracts, on the other hand, are complete automates, which means that there is a lower probability of typos and that any changes can be easily traced.
With digital contracts, you can save unnecessary operating costs in a way that traditional contracts cannot
- The contract process requires time and effort, as well as materials such as paper and printing. This increases the transaction costs of a contract. When you switch to digital contracts, there are no additional costs.
APIs allow you to integrate electronic contracts from your CRM
- By using electronic contracts, you can integrate your chosen platform with Salesforce, HubSpot, Microsoft CRM, and other systems. This expands the possibilities and potential of the existing CRM system. If you stick to traditional contracts, you won't be able to take advantage of these benefits.
Digital contracts are valid and enforceable
- Some people don't want to switch to electronic contracts, and that is usually the reason why. The good news, though, is that you don't have to worry anymore. According to general law, a digital contract is a written agreement between two contractual partners. The parties to the contract can sign the documents without violating their privacy.
Compared to traditional contracts, digital contracts make it easier to track and find data
- Since everything is stored in the cloud, there is no risk of data loss. To make it easier to track and find data, the Contract software via an intelligent categorization of documents. Traditional contracts, on the other hand, require physical storage that is less reliable than their digital alternative.
What makes for a good contract?
The following features are, in our opinion, “must-haves” for creating more effective and engaging contracts that your customers will love.
1. Adoption of a dynamic contract template
Many companies use the same types of contracts over and over again. With contract management software, such as the one we offer at top.legal, you can develop and maintain pre-approved templates, which streamlines the contract creation process and helps companies to enforce their uniform language even in the largest organizations.
2. Use clause libraries to determine key parameters
Legal teams can use Clause libraries Create pre-approved clauses, which streamlines the negotiation and contract creation process. Creating contract templates, for example, is often as easy as selecting clauses from the clause library and arranging them in the correct order. Another example: If an external party refuses to agree to the terms of a particular clause, the clause library can store an alternative fallback language that is prepared for these recurring circumstances and is immediately available.
3. Include video explanations to make the contract more interactive
Complex provisions in contract software can often be broken down into smaller meta-level explanations using text or video. With a little humanity, even complex formulas can be resolved quickly.
4. Collaborate on contracts in real time
Communication with all parties involved in the contract life cycle is critical, particularly during the review and amendment phase. When real-time collaboration is enabled, each party has access to the latest version of the contract, which minimizes errors and ensures that everyone involved is literally on the same page. Some CLM solutions offer an editing feature that allows immediate and seamless comments and revisions of contracts and makes these changes easy to review.
5. Visually monitor contract changes
It is crucial to be able to understand who has changed what and when several employees are revising the same contract. top.legal contract management software offers both transparency and a better understanding of which changes come from which departments.
6. Have the option to sign contracts electronically
Managers with signature rights are constantly busy with important tasks. Sending contracts to be signed in the traditional way fosters silos and delays contract execution. The eSignature functionality, on the other hand, provides a faster legal means to obtain stakeholder consent for contracts and documents, and provides other benefits for the company, such as security, verification, and audit features.
7. Notifications to manage deadlines for commitments, conditions and important clauses
An important part of contract management is to be aware of upcoming contract extensions, unfulfilled obligations and important contract clauses. top.legal supports you in these areas by reminding you in good time of future contract extensions and informing you of cases of non-compliance and unfulfilled obligations.
