Contract Validation

You use contract validation rules to:

1. Manually search for valid contracts on requisitions or purchase orders.

2. Copy existing requisitions or purchase orders to a new requisition or purchase order.

   If a copied transaction has an existing contract, the system copies that contract again using the more current version, and carries out the validation and pricing logic described for the price adjustment calculations. If a copied transaction does not have a contract, the system attempts to provide a contract by default if the Default Contract on Req or Default Contract on PO check box is selected.

3. Ensure that a contract is still valid for the transaction. For example:

   • If information on the line is changed such as the requester or buyer changing the item to one that is not referenced on the contract.

   • If information on the contract is changed when a requisition that references the contract is sourced to a purchase order.

4. Determine the pool of contracts from which the system determines the most valid contract to default on transactions.

The system considers this information to validate whether a contract is valid for a transaction:

1. The contract process option must be Purchase Order, General Contract, Release to Single PO Only, or Manufacturer.

   You can manually reference only the Release to Single PO Only process option contracts through online requisitions.

2. The contract current version is Approved.

   For Manufacturer contract, the associate Distributor contract is also approved.

3. For non-Manufacturer contracts, the supplier matches the transaction supplier for purchase orders only.

   For Manufacturer contracts, the manufacturer on the transaction line matched the manufacturer on the Manufacturer contract and the distributor on the Manufacturer contract matches the transaction supplier.

4. The requisition or purchase order date must fall within the contract begin and expiration dates.

   For Manufacturer contracts, the requisition or purchase order date must fall within the Distributor contract begin and expiration dates.

   The expire date doesn't always exist, so you should assume an infinite time frame in this case. Also:

   • On manually entered requisitions, failure to meet the date requirement generates a warning.

   • On manually entered purchase orders, failure to meet the date requirement generates an error message. In this case, the prompt on the contract will not list these contracts.

   • Purchase order sourcing does not select a contract if the transaction date is outside of the contract dates.

5. Item, or Order-by-description (ad hoc) eligibility requires one of the following conditions:

   1. The transaction item ID matches the one on the contract.

   2. Order-by-description (ad hoc) lines matches using the transaction category and an alternate item identifier such as the supplier item id, manufacturer item id, or UPN ID when either the Punchout Items or Other Description Items are enabled on the Contract and Vendor Rebate Controls Page.

   3. The transaction item category matches the one on the contract category reference, and the item is not listed as an exception.

   4. The contract allows for open-item reference.

6. Contract Control Type restricts contract usage when enabled and eligibility requires one of the following conditions:

   1. Contract Control Type usage is restricted to Ship To and the transaction line ship-to location matches the contract Ship To. Manufacturer contracts matches using the Distributors contract’s Ship To.

   2. Contract Control Type usage is restricted to Contract Domain (region) and the transaction line ship-to is associated with a contract domain (region). Manufacturer contracts matches on the Distributor contract’s Contract Domain (region).

   3. Non–corporate contracts are setup using contract control type business unit and the transaction is setup for the transactional business unit.

If the Use Contract if Available check box is selected and the contract specified on the requisition line is no longer valid during purchase order sourcing, the sourcing process searches for a new, and the most valid, contract to reference. If no valid contract is yet available for reference, the system displays an error message and rejects sourcing the transaction.