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Oracle® Fusion Applications Procurement Implementation Guide
11g Release 1 (11.1.2)
Part Number E20383-02
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20 Define Procurement Contracts Configuration

This chapter contains the following:

Define Contract Terms Library Configuration

Contract Terms Library Clauses: Explained

Define Contract Terms Library Configuration

Contract Terms Library Setups: How They Work Together

This topic provides a brief overview of setups for the Contract Terms Library.

The following figure outlines the main setups for the Contract Terms Library which are described in the sections of this topic. The setups on the left are accomplished using tasks from the Setup and Maintenance work area. To set up most of the Contract Terms Library features, including clauses and contract terms templates, you must navigate to the Terms Library work area. Dashed boxes highlight features that are available only in procurement contracts.

This figure outlines Contract Terms
Library setups.

Setups in Oracle Fusion Functional Setup Manager

Different Oracle Fusion Functional Setup Manager tasks enable or affect Contract Terms Library features. These setups include:

Contract Terms Library Work Area Setups

The Contract Terms Library is built using the tasks within the Terms Library work area:

Contract Terms Library Clauses: Explained

You can create different types of clauses for different uses and use clause properties to specify if a clause is protected from edits by contract authors, if it is mandatory, and if it is related to or incompatible with other clauses. A clause you create in the Contract Terms Library is available for use within the business unit where you create it after it is approved.

The types of clauses you can create include:

Using different clause properties you can:

Creating Standard Clauses

Any clause you create in the library becomes a standard clause that can be used in the business unit where you create it after it is approved. Unless you specify that the clause is protected, contract authors can edit the clause in a specific contract. Any edits they make are highlighted in a clause deviations report when the contract is approved. Similarly, contract authors can delete the clause from a contract, unless you specify the clause is mandatory.

Including Clauses by Reference

For clauses, such as Federal Acquisition Regulation (FAR), you can print the clause reference in the contract instead of the clause text itself. During contract creation, you enter the reference on the Instructions tab of the clause edit page and select the Include by Reference option.

Creating Provision Clauses for Contracts with a Buy Intent

For contracts with a buy intent, you can create provision clauses, clauses that are included in contract negotiations but are removed after the contract is signed. Provision clauses are used primarily in Federal Government contracting.

Altering Clause Behavior with Clause Properties

Using different clause properties, you can alter the behavior of a clause, You can:

Contract Terms Templates: How They Work

You can create contract terms templates in the Contract Terms Library to insert appropriate terms and conditions into contracts during contract authoring. Contract authors can apply the templates manually or the application can apply the templates automatically using defaulting rules you set up.

Contract terms templates:

In addition, for a contract terms template you can:

This figure illustrates the different
aspects of contract terms templates.

Adding Sections

You can add sections that you have created in the library or create sections that are specific to the template itself.

Adding Clauses

You can add clauses in one of two ways:

For example, you may want to add a boilerplate jurisdiction clause directly into the template, but use a Contract Expert rule to insert the appropriate liability clause. This way a contract that calls for the shipment of hazardous materials will get a liability clause that's different from a contract that does not include any, for example.

The properties that you set up in the clause apply automatically. If you set up a clause as mandatory, contract authors will not be able to delete the clause after it is inserted by the template unless they have the special Override Contract Terms and Conditions Controls privilege. If you set up a clause with alternates, then authors can substitute any of the alternate clauses in the contract.

Note

You are not required to add any sections or clauses to a template directly. You can use Contract Expert rules exclusively, if appropriate.

Enabling Contract Expert on the Template

If you want to use Contract Expert in a contract where the template is applied, you must enable the template for Contract Expert by selecting the Enable option in the Contract Expert region in the Create Terms Template or Edit Terms Template pages.

When Contract Expert rules enabled for the template suggest additional clauses, these additional clauses are presented for review by contract authors before they are inserted in the default section specified in each clause. Depending on their level of privileges, some contract authors can choose which clauses to insert and which to omit. If you make Contract Expert suggestions mandatory for the template, then only users with the special Override Contract Terms and Conditions Controls privilege can reject the recommendations.

Adding Contract Terms Deliverables to Purchase Orders and Sourcing Contracts

For Oracle Fusion Purchasing purchase orders and Oracle Fusion Sourcing contracts, you can track compliance of tasks that the contract parties have agreed to execute as part of the agreement by adding contract terms deliverables.

You can use the deliverables to record the status of the tasks, keep everyone notified of past and future deadlines, and as a repository of the deliverable documents themselves. For example, vendors agreeing to supply a monthly report can log in to their sourcing portal and attach the report or ask for an extension. If they fail to respond by the specified deadline, the deliverable can trigger an automatic notification that the deliverable is overdue.

Assigning a Layout Template for Previewing the Contract Terms Template

You must assign a layout template with the contract terms template to make it possible for contract authors to get a preview of the template content, when they need to make a template selection, for example. The layout template, which you select on the General tab while editing the contract terms template, specifies what gets displayed in the preview, including the fields displayed, graphics such as a company logo, page numbering, headers and footers, and boilerplate text. This layout template is not used for printing the contract.

The layout template is an RTF file stored in the Enterprise Contracts folder in the Business Intelligence Presentation Catalog. A sample layout template is provided with your application. You can copy the sample template and edit it to create your own as described in a related topic.

Specifying a Numbering Scheme

You can associate a numbering scheme to the template that will automatically number sections and clauses in the contract. Several predefined numbering schemes are available with your application, and you can create additional numbering schemes of your own.

Defaulting the Template on Contracts

You can have a contract terms template apply automatically in all contracts based on:

If you enabled the feature Enable Contract Terms in Fusion Procurement for the option Procurement Contracts during implementation, then you can also apply templates to procurement documents based on document type.

The following document types become available:

While editing the contract terms template, you specify a template to be the default for a contract type or document type in the Document Types region. You can set up only one template as the default for each contract type or document type. You set up the Contract Expert template selection rules separately as described in a related topic. You can have multiple rules recommend the same template.

Here is how the defaults you enter in the Document Types region and the Contract Expert template selection rules interact to select and apply a template during contract authoring:

Contract Expert Rules: How They Work

You can set up Contract Expert rules to apply contract terms templates automatically to contracts, to suggest additional clauses for insertion during contract terms authoring, and to flag any contract deviations from company policy.

Each rule comprises conditions that must be met and the rule results. You can base rule conditions on:

Different Contract Expert rule types support different condition types, as illustrated in the following figure.

This figure illustrates the three types
of Contract Expert rules.

Key rule properties include:

Clause Selection Rules

Clause selection rules permit you to insert one or more clauses and sections into a contract.

The following table describes the rule properties.


Rule Property

Details

Rule outcomes

The rule can:

  • Recommend one or more clauses for insertion into the contract

    Contract authors can review the Contract Expert recommendations before the clauses get inserted into the contract. By setting the Expert Clauses Mandatory option when creating a contract terms template, you can specify if you want the clause insertion to be mandatory or if the authors can ignore the recommendations .

    If you make the insertion mandatory, then only contract authors with the Override Contract Terms and Conditions Controls privilege, a special privilege that allows deleting mandatory clauses from the contract, can reject the recommendations. Similarly, if the recommended clauses are standard clauses, then the authors must have the Author Additional Standard Contract Terms and Conditions privilege to reject the recommendations. This privilege allows the deletion of standard clauses from the contract.

    Contract Expert inserts each clause in the section specified as the default for the clause in the Contract Terms Library. If no default section is specified in the clause, then Contract Expert inserts the clause into the default section specified in the contract terms template. Contract Expert automatically inserts the default section if it does not already exist in the contract.

  • Ask follow-up questions

    You can ask follow-up questions by adding them in the Additional Questions region of the Results tab. Any additional question that you add must be part of another rule. Adding the follow-up question chains the rules together.

When the rule is evaluated

The rule is evaluated every time that a user runs Contract Expert.

Users receive an warning message during contract validation if they fail to run Contract Expert.

Conditions

Conditions can be based on:

  • clauses

  • questions

  • variables

    You can use both predefined system variables and user variables. Both types of user variables are supported: those that require entry by contract authors and those where the values are supplied by a Java procedure.

Where it applies

The rule applies only within the business unit and for the intent that you specify. You can have the rule apply to one of the following:

  • Specific contract terms templates

  • All contract terms templates for the business unit

Contract Terms Template Selection Rules

Contract terms template selection rules permit you to automatically apply a contract terms template to a contract.

The following table describes the rule properties.


Rule Property

Details

Rule outcomes

The application automatically applies a contract terms template to a contract. Or, if the author removed the contract terms using the Actions menu, the template displays the template name as the default when applying a new template.

When the rule is evaluated

The application evaluates the rule whenever the author navigates to the Contract Terms tab as long as no contract terms template is applied. If a contract terms template is applied to the contract, the template selection rules are not executed again, even if changes to the contract would result in a different rule outcome.

The rule is also evaluated to determine if the contract contains the recommended template whenever the contract author:

  • runs the clause deviations report

  • validates the contract terms or the contract

In both cases, the rule generates a warning if the author applied a different template from that recommended by the rule.

Conditions

Variables only

You can use predefined system variables and those user-defined variables where the values are supplied by a Java procedure.

Where it applies

The rule applies only within the business unit and for the intent specified in the rule.

Contract Expert does not apply a contract terms template if the contract terms template defaulting rules you set up recommend multiple terms templates for a single contract. Instead, Contract Expert applies the contract terms template specified as the default for the business document type during contract terms template setup. If no document type default is specified, then the application displays the Add Contract Terms button and permits authors to select a template of their own choice. The choices are restricted to the templates specified for the contract type.

This figure describes choosing a contract
terms template for application to a contract.

Policy Deviation Rules

Policy deviation rules flag deviations from company policies on the contract deviations report. This report is run by the contract author before submitting a contract for approval.

The following table lists the rule properties.


Rule Property

Details

Rule results

The rule displays a deviation in the contract deviations report.

The rule name becomes the deviation.

When the rule is evaluated

The rule is evaluated whenever the user:

  • Runs the contract deviations report

  • Validates the contract terms or the contract

Conditions

Conditions can based on:

  • Questions

  • Variables

    Both predefined system variables and those user-defined variables where the values are supplied by a Java procedure.

Where it applies

The rule applies only for the contract terms templates within the business unit and for the intent that you specify.

The following figure illustrates the policy deviation rule setup. You can build rule conditions out of both questions and variables. In the contract deviation report, your entry in the Rule Name field becomes the deviation name and your entry in the rule Description field becomes the deviation description.

This figure illustrates a Contract Expert
policy deviations rule.

Policy deviation rules list policy deviations in the contract deviations report, along with any clause deviations that are flagged automatically by the application. Contract authors can run the report before submitting the contract for approval and enter comments to explain the deviation to the approver. The report is rerun automatically when the author submits the contract for approval and a copy of the report is attached to the approval notification.

Activating and Validating Rules

After you set up a rule, you must activate it using the Activate Rule action. Rules do not require approval before activation, but the contract terms templates that they apply to do.

Note

In order to activate a rule, you must assign it to at least one contract terms template. The template does not have to be approved at the time that you make the assignment, but it does have to be approved before the rule can be used.

Activating a rule triggers an automatic validation process. You must correct all errors before the rule gets activated.