Contracts are one of the most important documents in an enterprise. Your company´s contracts are significant to daily operations, because they represent all business relationships throughout the enterprise. To ensure that your company gets most out of their contracts and limit risk exposure, it has to be ensured that the contract terms and conditions are met and that the contract is based on the approved legal language.

Many companies use clauses and legal contract templates as a starting point for legal contract authoring. The legal contract is the legally binding contract document which is signed by both parties and contains legal language and the terms and conditions.

The business scenario starts with the creation of clauses which are grouped into sections and sections are used to create templates. After you select an appropriate template, you can develop and finalize the legal contract using internal and external collaboration capabilities.

The finalized legal contract can be stored in a central repository which provides visibility to authorized users.

The strategic purchaser creates the operational contract and, if applicable, triggers a workflow to approve the operational contract. Upon approval, the contract can then be used as a source of supply for upcoming purchasing requests. The operational contract is a structured contract document with header and line item part which is used for execution purposes.

The Operational Contract Management is the process for creating and maintaining contracts and managing Global Outline Agreement. Contracts that have been created can appear as sources of supply in the system and be assigned directly or displayed as possible selections. In the case of purchase orders, release values are posted directly to the contract. If you are using the SAP Business Information Warehouse (BW), you can trigger reports that generate an overview of the contracts release value.