How You Author a Procurement Contract

This topic explains the process of authoring a supplier contract by selecting the Create Contract task in the Contracts work area.

The following figure outlines the process described in the sections of this topic.

1. In the Create Contract window, you enter the basic information required to create the supplier contract.

   Selecting the contract type determines what additional information you can enter.

2. The application creates the enterprise contract and displays it for you to edit.

3. Enter additional contract details like commitment details, term details, and source document details.

   Note: In the Commitments section, you can use the Encumbrance Level drop-down list to reserve or restrict amount associated with either Agreement or Release. So, when you select Agreement, the agreement amount is reserved.

4. Depending on the contract type, you can:

   • Add contract lines.

   • Author contract terms and review contract deviations..

   • Create contract fulfillment.

   • Select the determinant level for autonumbering a contract.

   • Designate contacts as signers on the contract.

5. Validate the contract and correct any errors.

6. Submit contract for approval.

Entering Basic Contract Information

In the Create Contract window, you enter the basic information required by the application to create the contract. This includes:

• Business Unit

  The business unit where you are creating the contract. Selecting the business unit determines what contract types you can select. If your contract is not project-based, you can also select a business unit with no assigned ledger or legal entity.

• Legal Entity

  The internal legal entity entering into the contract. This is required only for project-based contracts.

• Type

  Contract type.

• Primary Party

  The primary supplier entering into the contract.

• Contract start and end dates

• Contract Currency

• Authoring Party

  Select Internal if your organization is authoring the contract. Select External if the supplier is providing the contract which you want to attach.

Depending on the business unit and contract type you selected, you may also be asked to enter:

• Number

  This field appears only if you are required to enter the contract number manually. The number you enter can include any alphanumeric characters and must be unique.

• Item Master

  If your contract includes contract lines then you may be asked to enter the item master inventory organization that will be used to select the items you are purchasing.

Note: You can't change the business unit, the legal entity, the currency, the contract type, and the contract number after the contract is created.

Adding Contract Information to the Contract Header

On the contract Header tab, add additional information depending on the contract type you selected. This may include:

• Additional contract parties and contacts

• Information about possible contract risks and their probability

• Contract documents

• List of related contracts

• Notes

Adding Contract Lines

If the Lines tab is visible, add contract lines to specify the items you are purchasing. Depending on the contract type, you can enter one or both of the following types of lines:

• Item

  For purchasing items tracked in inventory based on the item master entered in the contract.

• Free form

  For purchasing items that are not tracked in inventory.

Authoring Contract Terms

If the Contract Terms tab is visible, you can add and edit contract terms and conditions.

Just what actions you can take during contract terms authoring depends on your implementation, your privileges, and contract type. Some contracts may have their contract terms already populated from a contract terms template and permit you only to add and delete clauses from the Contract Terms Library. Other contracts may allow you to create nonstandard clauses or require you to answer questions to determine if additional clauses are required. For some contracts, you may attach the contract terms in a separate document and not use the authoring capabilities of the application at all.

If you do author contract terms for your contract, select the Review Contract Deviations action on the Contract Terms tab to determine if your contract deviates from your company standards. You can add any explanations for the deviations in the report which can be attached to the notification sent to the contract approvers.

Creating Contract Fulfillment Lines

You can create contract fulfillment lines if the Fulfillment tab is visible.

Contract fulfillment lines make it possible for you to track goods, services, reports, and other fulfillment items you are purchasing. Depending on the type of contract you are creating, you can use contract fulfillment lines to initiate the creation purchase orders or purchase agreements within Oracle Fusion Purchasing or in other integrated purchasing applications and monitor their execution from within the contract. The contract must be active before you can initiate the creation of the purchasing documents.

You can create contract fulfillment lines on the Fulfillment tab or you can automatically create fulfillment lines prepopulated with the information in the contract by selecting the Autocreate Fulfillment Lines action from the Actions menu at the contract level or on the Lines tab. See related topics for more details.

Validating and Submitting the Contract for Approval

The contract must pass validation before it is sent for approval. To validate the contract, select Validate from the Actions menu. Clicking the Submit button to submit the contract for approval also triggers the same validation process. You must fix all errors for the contract to pass validation. Resolving warnings is optional.