How Contract Expert Works

Use Contract Expert to enforce corporate policies and standards for all types of contracts, including enterprise contracts, purchase orders, and sourcing contracts.

Contract Expert helps you set up business rules that can:

• Apply the appropriate contract terms template to a contract.

  For example, apply the contract terms template Software License and Service Agreement if the contract is authored in the North America Operations business unit and the contract amount exceeds one million dollars.

• Insert additional clauses into specific predetermined locations in the contract.

  For example, add an audit clause if an audit is required.

• Report contract deviations from corporate policies.

  For example, report a contract worth one million dollars or more that includes payment terms greater than 90 days.

Contract Expert consists of two components: Rule setup and rule execution.

Rule Setup

Administrators create the rules that are stored in the Contract Terms Library. A rule can be based on these conditions:

• The values of variables in the contract: For example, recommend an additional clause if the shipment date on an order is greater than 90 days.
• Answers that you as contract authors provide to questions: For example, recommend an additional liability clause depending on a response to a question about hazardous materials.
• The presence of clauses in the contract: For example, if the contract includes a hazardous materials clause, then insert additional insurance clauses.

The first two condition types require your input during authoring.

Rule Execution

During contract authoring, Contract Expert evaluates the rules. For rules with conditions that require your input, Contract Expert asks you to provide missing variable values and to answer questions when you select the Run Contract Expert action. You can then evaluate any recommended clauses for insertion in the contract. Such clauses can also be inserted in predetermined locations, if you defined these locations in the terms template associated with the contract. You can review any policy and clause deviations by selecting the Review Contract Deviations action. Clause deviations are shown in a dashed box because they don't require Contract Expert rules.

This figure illustrates the setup and contract authoring components of contract expert:

Contract Expert Rule Setup

Depending on the type of rule that you are creating, you can base rule conditions on:

• Variables

  This condition is based on the value of a variable in the contract. The application either derives the value automatically from the contract, or you enter the value when you run Contract Expert.

• Questions

  This condition is based on answers to questions that you supply when you run Contract Expert.

• Clauses

  This condition is based on the presence of a specific clause in the contract.

Contract Expert rules apply only to contract terms templates where Contract Expert is enabled. You can specify if you want a rule to apply to all or selected terms templates.

Contract Expert Rule Execution During Contract Authoring

Depending on their type, all active rules for the contract terms template used in a contract are evaluated automatically. The evaluation happens during contract terms authoring or when you run Contract Expert in the Contract Terms tab.

If rule conditions require user input, Contract Expert prompts you to enter variable values and answer questions. Answers to questions can trigger follow-up questions. In this figure, the answer to Question 1 triggered the follow-up Question 2.

Contract Expert displays any recommended clauses for your review. You can choose which of the recommended clauses to insert into the contract as long as you have sufficient privileges.

Contract Expert inserts the clauses in the contract terms section specified during clause setup in the Contract Terms Library. If no section is specified in the clause, the application uses the default section specified in the contract terms template. Contract Expert automatically inserts the default section if it doesn't already exist in the contract. The clauses recommended for insertion might also be placed in their predetermined locations, if you defined these locations in the terms template associated with the contract.

On subsequent runs, Contract Expert first removes any clauses that it inserted into the contract in earlier runs, including clauses that have been moved or have been made nonstandard.

This figure illustrates the behavior of Contract Expert during contract authoring:

If you don't make all the required entries or forget to run Contract Expert altogether, expect to receive warnings when you validate the contract terms or when you review the contract deviations report.