Oracle® Fusion Applications Enterprise Contracts Implementation Guide 11g Release 1 (11.1.2) Part Number E20371-02

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16 Define Contracts Common Configuration

This chapter contains the following:

Specifying Customer Contract Management Business Function Properties

Specifying Supplier Contract Management Business Function Properties

Defining Notes: Points to Consider

What's an Interaction

Managing Contract Party Roles and Sources

Managing Party Contact Roles

Managing Contract Types

Managing Contract Risks

Enabling Different Levels of Contract Terms Editing During Contract Authoring: Explained

Setting Up Contract Text Search: Highlights

Specifying Customer Contract Management Business Function Properties

Customer Contracts Business Unit Setup: Explained

Using the Specify Customer Contract Management Business Function Properties task, available by navigating to Setup and Maintenance work area and searching on the task name, you can specify a wide variety of business function settings for customer contracts in a specific business unit. The selections you make for these business functions impact how Oracle Fusion Enterprise Contracts behaves during contract authoring.

Using the Specify Customer Contract Management Business Function Properties task, manage these business function properties:

• Enable related accounts

• Set currency conversion details

• Manage project billing options

• Set up the Contract Terms Library

  The setup options available for the Contract Terms Library are applicable to both customer and supplier contracts, and are described in the business unit setup topic for the Contract Terms Library. That topic is available as a related link to this topic.

Enabling Related Customer Accounts

Contract authors can specify bill-to, ship-to, and other accounts for the parties in a contract. Enable the related customer accounts option if you want accounts previously specified as related to the contract party to be available for selection.

Managing Currency Conversion Options

If your organization plans to transact project-related business in multiple currencies, then select the multicurrency option. This allows a contract author to override a contract's currency, which defaults from the ledger currency of the business unit. It also enables the contract author to specify currency conversion attributes to use when converting from the bill transaction currency to the contract currency and from the invoice currency to the ledger currency.

In the Bill Transaction Currency to Contract Currency region, enter currency conversion details that will normally be used, by all contracts owned by this business unit, to convert transaction amounts in the bill transaction currency to the contract currency. Newly created contracts contain the default currency conversion values, but you can override the values on any contract, if needed.

In the Invoice Currency to Ledger Currency region:

• Enter invoice transaction conversion details if the invoice and ledger currencies can be different.

• Enter revenue transaction conversion details if the revenue and ledger currencies can be different for as-incurred and rate-based revenue.

Managing Project Billing Options

The options available for selection in the Project Billing region control the behavior of project invoicing and revenue recognition for contracts with project-based work.

Project billing can behave differently for external contracts (customer billing) or intercompany and interproject contracts (internal billing).

Set these options, which apply to all contracts:

• Select the Transfer Revenue to General Ledger option if you want to create revenue accounting events and entries, and transfer revenue journals to the general ledger. If this option is not selected, then revenue can still be generated, but will not be transferred to the general ledger.

• Indicate if a reason is required for credit memos that are applied to invoices.

There are two sets of the following options, one for customer billing and a second for internal billing:

• Select an invoice numbering method, either Manual or Automatic. The invoice numbering method is the method that Oracle Fusion Receivables uses to number its invoices, upon release of draft invoices from Project Billing.

  • If the invoice numbering method is Manual, then select an invoice number type, which sets the type of Receivables invoice numbers that are allowed. Valid values are Alphanumeric and Numeric.

  • If the invoice numbering method is Automatic, then enter the next invoice number to use when generating Receivables invoice numbers.

• Select the Receivables batch source to use when transferring invoices to Receivables.

Set this option only for customer billing:

• Indicate if you want contract authors to manually enter the Receivables transaction type on the customer contracts they create.

Contract Terms Library Business Unit Setup: Explained

You can specify a wide variety of Contract Terms Library settings for either customer or supplier contracts within each business unit, by using either the Specify Customer Contract Management Business Function Properties or the Specify Supplier Contract Management Business Function Properties tasks. These tasks are available by navigating to the Setup and Maintenance work area and searching on the task name.

For the Contract Terms Library in each business unit, you can:

• Enable clause and template adoption.

• Set the clause numbering method.

• Enable the Contract Expert feature.

• Specify the layout for printed clauses and contract deviation reports.

Enabling Clause Adoption

If you plan to use clause adoption in your implementation, then set up the following:

• Specify a global business unit

  You must designate one of the business units in your organization as the global business unit by selecting the Global Business Unit option. This makes it possible for the other local business units to adopt and use approved content from that global business unit. If the Global Business Unit option is not available for the business unit you are setting up, this means that you already designated another business unit as global.

• Enable automatic adoption

  If you are implementing the adoption feature, then you can have all the global clauses in the global business unit automatically approved and available for use in the local business by selecting the Autoadopt Global Clauses option. If you do not select this option, the employee designated as the Contract Terms Library Administrator must approve all global clauses before they can be adopted and used in the local business unit. This option is available only for local business units.

• Specify the administrator who approves clauses available for adoption

  You must designate an employee as the Contract Terms Library administrator if you are using adoption. If you do not enable automatic adoption, then the administrator must adopt individual clauses or localize them for use in the local business unit. The administrator can also copy over any contract terms templates created in the global business unit. The clauses and contract terms templates available for adoption are listed in the administrator's Terms Library work area.

Setting Clause Numbering Options

You can set up automatic clause numbering for the clauses in the business unit by selecting Automatic in the Clause Numbering field and entering a Document Sequence Category you previously set up in the Clause Sequence Category field. If clause numbering is manual, contract terms library administrators must enter unique clause numbers each time they create a clause.

You can choose to display the clause number in front of the clause title in contracts by selecting the Display Clause Number in Clause Title option.

Enabling Contract Expert

You must select the Enable Contract Expert option to be able to use the Contract Expert feature in a business unit. This setting takes precedence over enabling Contract Expert for individual contract terms templates.

Specifying the Printed Clause and Deviations Report Layouts

For each business unit, you can specify the Oracle BI Publisher RTF file that serves as the layout for:

• The printed contract terms

  Enter the RTF file you want used for formatting the printed clauses in the Clause Layout Template field.

• The contract deviations report

  The RTF file you select as the Deviations Layout Template determines the appearance of the contract deviations report PDF. This PDF is attached to the approval notification sent to contract approvers.

Specifying Supplier Contract Management Business Function Properties

Supplier Contracts Business Unit Setup: Explained

Using the Specify Supplier Contract Management Business Function Properties task, available by selecting Setup and Maintenance from the Tools menu and searching on the task name, you can specify a variety of business function settings for supplier contracts in a specific business unit.

The selections you make for these business functions impact how the Contract Terms Library behaves during supplier contract authoring.

Managing Contract Terms Library Setup Options

The setup options available for the Contract Terms Library are applicable to both customer and supplier contracts, and are described in the business unit setup topic for the Contract Terms Library. That topic is available as a related link to this topic.

Contract Terms Library Business Unit Setup: Explained

You can specify a wide variety of Contract Terms Library settings for either customer or supplier contracts within each business unit, by using either the Specify Customer Contract Management Business Function Properties or the Specify Supplier Contract Management Business Function Properties tasks. These tasks are available by navigating to the Setup and Maintenance work area and searching on the task name.

For the Contract Terms Library in each business unit, you can:

• Enable clause and template adoption.

• Set the clause numbering method.

• Enable the Contract Expert feature.

• Specify the layout for printed clauses and contract deviation reports.

Enabling Clause Adoption

If you plan to use clause adoption in your implementation, then set up the following:

• Specify a global business unit

  You must designate one of the business units in your organization as the global business unit by selecting the Global Business Unit option. This makes it possible for the other local business units to adopt and use approved content from that global business unit. If the Global Business Unit option is not available for the business unit you are setting up, this means that you already designated another business unit as global.

• Enable automatic adoption

  If you are implementing the adoption feature, then you can have all the global clauses in the global business unit automatically approved and available for use in the local business by selecting the Autoadopt Global Clauses option. If you do not select this option, the employee designated as the Contract Terms Library Administrator must approve all global clauses before they can be adopted and used in the local business unit. This option is available only for local business units.

• Specify the administrator who approves clauses available for adoption

  You must designate an employee as the Contract Terms Library administrator if you are using adoption. If you do not enable automatic adoption, then the administrator must adopt individual clauses or localize them for use in the local business unit. The administrator can also copy over any contract terms templates created in the global business unit. The clauses and contract terms templates available for adoption are listed in the administrator's Terms Library work area.

Setting Clause Numbering Options

You can set up automatic clause numbering for the clauses in the business unit by selecting Automatic in the Clause Numbering field and entering a Document Sequence Category you previously set up in the Clause Sequence Category field. If clause numbering is manual, contract terms library administrators must enter unique clause numbers each time they create a clause.

You can choose to display the clause number in front of the clause title in contracts by selecting the Display Clause Number in Clause Title option.

Enabling Contract Expert

You must select the Enable Contract Expert option to be able to use the Contract Expert feature in a business unit. This setting takes precedence over enabling Contract Expert for individual contract terms templates.

Specifying the Printed Clause and Deviations Report Layouts

For each business unit, you can specify the Oracle BI Publisher RTF file that serves as the layout for:

• The printed contract terms

  Enter the RTF file you want used for formatting the printed clauses in the Clause Layout Template field.

• The contract deviations report

  The RTF file you select as the Deviations Layout Template determines the appearance of the contract deviations report PDF. This PDF is attached to the approval notification sent to contract approvers.

Defining Notes: Points to Consider

A note is a record attached to a business object that is used to capture nonstandard information received while conducting business. When setting up notes for your application, you should consider the following points:

• Note Types

• Note Type Mappings

Note Types

Note types are assigned to notes at creation to categorize them for future reference. During setup you can add new note types, and you can restrict them by business object type through the process of note type mapping.

Note Type Mappings

After note types are added, you must map them to the business objects applicable to your product area. Select a business object other than Default Note Types. You will see the note types only applicable to that object. If the list is empty, note type mapping doesn't exist for that object, and default note types will be used. Select Default Note Types to view the default note types in the system. Modifying default note types will affect all business objects without a note type mapping. For example, you have decided to add a new note type of Analysis for your product area of Sales-Opportunity Management. Use the note type mapping functionality to map Analysis to the Opportunity business object. This will result in the Analysis note type being an available option when you are creating or editing a note for an opportunity. When deciding which note types to map to the business objects in your area, consider the same issues you considered when deciding to add new note types. Decide how you would like users to be able to search for, filter, and report on those notes.

What's an Interaction?

The primary purpose of an interaction is to provide a historical view of all communications initiated by you to a customer (outbound) or by a customer to you (inbound). Interaction is intended to document customer communication, not internal communication, therefore Customer is a required attribute. You can record the method of communication, or channel, by which the interaction occurred. For example, you can denote that the communication was via phone, E-mail, by chat, through a web conference, a meeting in person, and so on. It also records the business objects discussed in the communication. That is, which opportunity or marketing campaign was discussed? You can summarize the interaction or outcome in the Description attribute or pick a specific value in the Outcome attribute, such as "Left Message". But, the actual content of the interaction should be attached as a separate file, especially when it is larger. Finally, you can not only list the external customer contacts but also any internal resources who were participants in the interaction.

Extensibility features are available on the Interaction object. For more details, refer to the article Extending CRM Applications: How It Works

Managing Contract Party Roles and Sources

Setting Up Contract Party Roles and Making Them Available in Contracts: Explained

Party roles provide a way for you to specify the roles of different parties in the contract. For example, a sales contract may include the customer, a partner, and the internal business unit selling the product and service. Your application comes with predefined party roles, but you can create additional roles and you can specify how the roles are used in sales, purchasing, and project contracts.

This topic:

• Lists the predefined party roles and explains how you can add your own.

• Explains how you make those party roles available for use in buy-intent and sell-intent contracts.

Managing Party Roles

The application comes with the following predefined party role names in the lookup type OKC_PARTY_ROLE. You can add additional lookup codes in the Setup and Maintenance work area by selecting the Manage Contract Party Roles task.

Making Party Roles Available for Use in Contracts

To make party roles available for use in contracts, you must:

1. Associate each party role to the appropriate party source by selecting the Manage Contract Roles Sources task in the Contracts work area.

2. While managing contract types using the Manage Contract Types task in the Setup and Maintenance work area, add each party role to the contract types where you want the party role to be used. You can add a party role either as one of the two primary contract parties (the Buyer Role and the Seller Role) or as a secondary party. You can only have one Seller Role and one Buyer Role in a contract. You can have multiple secondary parties with the same role.

The application includes the following party sources which you cannot modify:

You can use the same party role for both buy-intent and sell-intent contracts by associating the party role to different sources. This figure shows how you can reuse the role Customer in both buy and sell contracts. The customer for sales contracts is a TCA party (Customer). The customer for buy contracts is an internal business unit.

To reuse the same party in buy and sell contracts, you:

1. Select the Customer party role in the Manage Contract Role Sources page.

2. Set the Sell Intent Source to Customer and the Buy Intent Source to Business Unit.

3. To use the party role in a contract, you must also enter it in contract types where you want to use it as one of the primary contact parties or as a secondary party.

The setup in this figure will have the following effect:

• When you create a sales contract, the Customer list of values lists external parties.

• When you create a purchasing contract, the Customer list of values lists business units.

Managing Party Contact Roles

Setting Up Party Contact Roles and Making Them Available for Use: Explained

Contact roles specify the roles party contacts play in the contract. Your application comes with a set of predefined contact roles, but you can set up additional contact roles for use with different parties in the contract.

This topic:

• Lists the predefined contact roles and explains how you can add your own.

• Explains how you associate the contact roles with party roles and contact role sources.

Managing Contact Roles

The application comes with the following predefined contact roles in the extensible lookup type OKC_PARTY_CONTACT_ROLE:

You can add additional contact roles by selecting the Manage Contract Contact Roles task in the Setup and Maintenance work area .

Making Contact Roles Available for Use in Contracts

For a contact role to be available for use in contracts, you must navigate to the Manage Contract Role Sources page by selecting the Manage Contract Roles Sources task in the Contracts work area and make the following entries for each of the party roles where you want the contact role to be available:

1. Select the party role.

2. Add the contact role.

3. Enter the sell-intent contact source or the buy-intent contact source or both. Which contact sources you can enter depends on the party source settings for the party role.

The following contact sources come predefined with the application in the system lookup type OKC_PARTY_CONTACT_SOURCE. You cannot edit the contract role sources or add additional ones.

The following figure illustrates the setup required to make a contact role available in both customer and supplier contracts:

1. The party role Customer is associated with both a sell intent and buy intent source. In a sales contract, a Customer party is a TCA party (party source Customer). In a buy-intent contract, the Customer is an internal business unit.

2. You make the contact role available in both customer and supplier contracts by specifying the Sell Intent Source as Customer Contact and to the Buy Intent Source as Employee.

3. In sales contracts, customer contacts will now be TCA party contacts. In procurement contracts, customer contacts will be employees.

Managing Contract Types

Contract Types: Explained

A contract type is a contract category that contract authors must select when creating a contract. It is a mandatory setup that determines the nature of the contract, for example, if the contract is a project contract, a purchasing contract, or a simple nondisclosure or employment agreement. A contract type also specifies what kinds of information you can enter and what contract lines, parties, and party contacts are permitted.

This topic provides an overview of the superset of contract type setups for a broad range of contracts. When setting up individual contract types, only a subset of the fields listed here are visible. For example, the project billing option entries are visible only in contract types with a sales-intent, the notifications fields appear only for contract types with a buy-intent.

Overview

Create contract types by selecting the Manage Contract Types action from the Setup and Maintenance work area. You can also create contract types in the Contracts work area by selecting Contract Types under the Setup task heading. In each contract type you can:

• Specify if the contract includes lines and what can be entered into them.

• Require contract authors to capture customer acceptance after internal contract approval.

• Specify what primary and secondary parties can be entered during contract creation.

• Specify the layout templates that will be used for printing the contract and the contract terms.

• Specify if and when the contract owner is notified before the contract expires.

• Specify the billing options for project contracts.

• Enable the capture of contract risks and interactions with contract parties.

• Enable the ability to relate a contract to other contracts.

• Permit the authoring of contract terms using the Contract Terms Library.

Common Contract Type Entries

The following table describes the common contract type entries:

Line Types

You can enter the line types permitted by the class you selected for the contract type and only if you selected the Allow Lines option during the contract type creation. The following table describes the possible line types.

Additional Party Roles

You can add party roles that contract authors can add to a contract in addition to the primary parties specified in the Buyer Role and Seller Role fields. A contract author can add multiple additional parties with the same role to the contract.

Project Billing Options

For contract types created for projects (sales-intent contract types of class Enterprise Contract and at least one project line type), you can set the following project billing options:

Enabling Contract Deliverable Notifications for Purchase Contracts

For purchase contracts, you can use the Deliverable Notifications tab to specify what contract deliverable notifications will be sent to what contact role. Available notifications are slightly different for each type of contract:

For contracts with purchase order deliverables, you can notify contacts with a specific role:

• A specified number of days before or after the deliverable due date

• When a purchase order is created from a deliverable

• When a purchase order cannot be created from a deliverable

• When a deliverable is placed on hold

• When purchasing activity is complete on a deliverable

For contracts with blanket purchase agreement deliverables or contract purchase agreement deliverables, you can notify:

• When an agreement is created from a deliverable

• When an agreement cannot be created from a deliverable

• When purchasing activity is complete on a deliverable

• When an agreement is placed on hold

• A specified number of days before or after the agreement end date

Enabling Contract Terms Authoring and Other Advanced Options

You can enable contract terms authoring and other advanced contract terms authoring options on the Advanced Authoring Options tab. These are described in the following table:

Key Contract Type Settings for Different Kinds of Contracts: Examples

This topic provides examples of key contract type settings for different kinds of enterprise contracts, including employment agreements, purchase contracts, purchase agreements, and sales contracts with project work.

Employment Agreement

You want to create a standard employment agreement that can be edited during negotiations with a new employee.

Purchase Contract

You want to create a purchase contract that can be used to create and monitor purchase orders within Oracle Fusion Purchasing.

Purchase Agreement

You want to create a contract for future purchases which creates blanket purchasing agreements within Oracle Fusion Purchasing.

You want to create a blanket purchase agreement when you know the detail of the goods or services you plan to buy from a specific supplier and want to negotiate their price, but you do not yet know the detail of your delivery schedules.

Enterprise Sales Contract with Project Work

You want to create a sales contract that governs the billing of items and services to projects in Oracle Fusion Projects.

Setting Up Contract Types for Different Kinds of Contracts: Points to Consider

This topic explains how to set up contract types for different kinds of enterprise contracts.

Your contract type setup depends on the type of contract you are setting up. The main types are:

• Customer Contracts

  Your organization is selling goods and services.

• Supplier Contracts

  Your organization is purchasing goods and services.

For these types of contracts, the key contract type settings are based on the following questions:

1. Are you selling or buying?

   For Intent, you select either Sell or Buy.

2. Are you buying or selling now or negotiating a long-term contract with terms, such as pricing, that will govern a future purchase or sale?

   For Class, select Enterprise Contract if you are buying or selling now. If you are negotiating a future purchase or sale, select one of the agreement classes, for instance Purchase Agreement for a future purchase.

3. Does the contract involve the purchase or sale of specific items?

   If the contract involves the purchase or sale of specific items, then you can specify how those items are entered into contract lines by adding different line types to the contract type. Some line types permit contract authors to select items tracked in inventory; others permit the entry of any item as text, for example, for free-form services.

   Some of the line types support integration with other Fusion applications, for example, project line types support the billing of items through Oracle Fusion Project billing. Buy-intent lines allow the capture of pricing information and support integrations to purchasing systems to create POs or blanket purchase agreements.

The combination of answers to these questions result in the numbered cases in this figure and are described in the different sections of this topic. Some functionality is planned for a future release.

There are other special kinds of contracts where these questions are less relevant or do not apply. These include:

• Partner Agreements

  Contracts with partners. See description of Case 1 for suggested contract type settings.

• Miscellaneous Contracts

  Contracts such as nondisclosure agreements or employment agreements. See description of Case 2 for suggested contract type settings.

Customer Contracts

This section describes the settings for sell-intent contracts.

Case 3: Customer Contracts with No Lines

Use the following contract type settings to create simple sales contracts with no lines.

Case 4: Customer Contracts with Lines

The following table describes the key contract type settings for sell-intent contracts for items or services. In this release, you can add lines for selling items and services that are executed as part of a project, for example, project manufactured items or professional services. Lines for selling services and regular inventory-based tangible items are planned for a future release.

Supplier Contracts

This section describes contract type settings for buy-intent contracts.

Case 5: Supplier Contracts Without Lines

The following table describes the key contract type setups for supplier contracts where you are negotiating purchase of items or services without specifying the actual items to be purchased.

Case 6: Supplier Contracts with Lines

The following table describes the key contract type setups for supplier contracts for immediate purchase of specific items or services.

Case 7: Contracts for Future Purchases Without Lines

This table describes the key contract type setups for future purchase contracts without lines.

Case 8: Contracts for Future Purchases with Lines

This table describes the key contract type setups for future-purchase contracts with lines.

Special Contracts

This section describes the settings you want to use for partner agreements and for miscellaneous contracts.

Case 1: Partner Agreements

Use the following contract type settings for partner agreements in Oracle Partner Relationship Management.

Case 2: Miscellaneous Contracts

The following table lists the key contract type settings for nondisclosure, employment contracts, and other simple contracts.

FAQs About Contract Types

Why can't I delete a contract type?

You cannot delete a contract type after it is used to create a contract. However, you can enter an end date to prevent its use in future contracts.

Must I create contract types to author contract terms on purchase orders or sourcing documents such as RFQs?

If you want to author contract terms on individual purchase orders or other Oracle Fusion Sourcing documents, such as RFQs, you are not required to set up contract types. This is because no enterprise contracts are created. The documents themselves are the contracts. All setups to enable contract terms templates and contract terms authoring are done from within Oracle Fusion Purchasing and Sourcing applications.

Managing Contract Risks

How can I set up contract risk?

You can set up the list of contract risks by selecting the Manage Risks task from the Setup and Maintenance work area. Contract authors use this list during contract authoring to record contract risks.

Recording contract risks helps your organization prepare for potential problems. It does not affect contract processing.

Enabling Different Levels of Contract Terms Editing During Contract Authoring: Explained

The level of editing a contract author can perform on contract terms depends on the privileges granted to them during security setup. This topic describes the different levels of editing privileges that system administrators can assign a contract author from the basic to the most advanced.

Privilege Levels and What They Permit

The following table lists the privileges which grant different levels of editing abilities from the basic to the most advanced. Each privilege adds additional authoring capabilities to the privileges before it, but the privileges are not cumulative. The contract author must also be granted all of the privileges below the level they need. For example, a contract author with a level 3 privilege must be granted the level 1 and level 2 privileges as well.

Setting Up Contract Text Search: Highlights

If you have implemented the Oracle Enterprise Crawl and Search Framework, you can enable text searches of contracts and their attachments from within the contracts application by running the following indexing schedules:

Running Indexing Schedules

The management of indexing schedules is fully described in the Managing Search with Oracle Enterprise Crawl and Search Framework chapter in the Oracle Fusion Applications Administrator's Guide.

• Deploying and starting indexing schedules.
  See: Managing Index Schedules

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