An Introduction to Contract Management Clause Libraries

An Introduction to Contract Management Clause Libraries

With the help of contract template libraries, preapproved clause libraries, a centralized contract repository, and automated workflows, contract management can be simplified. These revolutionary tools will impact your business for the better, and implementing SharePoint and Microsoft Office-based contract management software that includes a clause library is a great place to start.

In contract lifecycle management, following compliance policies is critical to managing risk and maintaining accuracy in your contract lifecycle management processes. Today’s technological advancements present a new set of challenges to contract management compared to traditional management methods. Contract management is a meticulous process comprised of several stages that rely on the actions of multiple people or parties.


Why a Contract Clause Library is an Advantage to Your Contract Management Process

Every business wants to set themselves apart from their competitors and leverage whatever can give them that extra edge. Every business also encounters a unique set of challenges that occur within contract lifecycle management. With a proper understanding of how to optimize each stage of the contract lifecycle and what methods work best to manage each stage, you can safeguard your business, mitigate risks, and increase productivity and efficiency.

In addition, you can reduce turnaround times that will have a positive impact on the overall value of your business so you can keep clients coming back. With effective contract lifecycle management, you can build upon and grow beneficial working relationships with clients, vendors, stakeholders, and employees. Contract lifecycle management software only makes all of these factors more attainable by providing you several solutions within reach. One of these extraordinary solutions that contract lifecycle management software provides is a preapproved contract clause library.

Contract Clauses Defined

A contract clause definition is that it is a detailed provision within a contract or legal agreement that provides context and understanding regarding a critical point within an agreement. The contract clause serves the parties or individuals involved in a contract by defining specific contract conditions and parameters. A clause specifies various circumstances, factors, and/or rights that provide a frame of reference to all engaged in the contract.

To add, clauses are typically placed toward the end of a contract. Clauses describe various characteristics of a business or organization, and there are many categories of clauses. Contracts and their included clauses are legally binding.

The Most Common Categories of Contract Clauses

Below are some of the most commonly used types of clauses, as well as types of clauses that discuss certain information and agreements:

  • Force Majeure clause
  • Severability clause
  • Exclusion clause
  • Indemnity clause
  • Confidentiality clause
  • Intellectual property ownership agreement
  • Service Level Agreements
  • Non-disclosure agreements

How Does a Contract Clause Library Help in Contract Management?

In a contract management system, a contract clause library stores preapproved clauses to keep your contract management processes compliant and in the clear – mitigating risk with every contract designed.

Inside a contract clause library, there are several classes of clauses:

  • Clause types: provided with a contract clause definition of every clause type and a connection to the type of contract the specific clause belongs to
  • Clauses: stored in the contract clause library within your contract management system’s centralized repository (used when building contracts)
  • Bundles of clauses: groups of clauses based on the type of contract each clause bundle belongs to
  • Modified clauses: clauses currently used by a certain document (can be modified during negotiations without impacting the master clause)
  • Clause alternatives: notated as preapproved clauses that can be substituted in for clauses that are actively used
  • Sub-clauses: related to master clauses (considered the child of the master clause)

Contract lifecycle management software can help during the negotiation stage of contract lifecycles because the software enables you to modify clauses as needed and match them with individual forms and documents. In this way, you practice risk management by locating risk immediately the moment it occurs. Additionally, CLM software keeps you aware of which contracts are currently undergoing negotiations and which contracts are being modified throughout the lifecycle of the contract.

E-book Key Factors to Acquire a Successful Contract Management System

How Contract Clause Libraries Boost Productivity and Organization

Your business will increase results by leveraging the features of a contract clause library. A clause library streamlines contract building and negotiations by providing you with several preapproved clauses that are systematically organized by clause type. In this way, contract lifecycle management becomes simpler and more efficient in these specific stages of the contract lifecycle.

By having preapproved contract clauses readily available, you can build accurate contracts that are up to compliance standards and policies, ensuring your company is mitigating risk wherever possible. A contract clause library with clause bundles helps in the creation of many different types of contracts that your business regularly builds. Leading contract lifecycle management software can provide alternatives to the terminology and language used during contract building and contract negotiation stages.

The benefits of a contract clause library include the following:

  • Build accurate contracts instantly
  • Employ a centralized location for storing and managing preapproved contract clauses
  • Use auto populate capabilities of existing data
  • Easily modify clauses across several templates
  • Enable or disable permissions access for employees

Why a Contract Clause Library Mitigates Risk Effectively

There is inherent risk involved in building contracts. A contract clause library can help increase transparency and visibility within your organization – which is vital. Without appropriate levels of visibility, you will encounter discrepancies, human errors, miscommunications, low ROI, and avoidable expenses.

Risk mitigation is extremely important in contract management. Having a clear idea of the state of your contracts and being able to effectively oversee every detail of contract lifecycles and contract clauses is essential to organization, productivity, and efficiency. Without these, you might face more issues as you continue managing and creating contracts.

Assess all financial risks within your business’s current contract management processes and decide if any modifications need to be made so you are well-prepared. Including a contract clause library is an excellent way to be risk-preventative. A contract clause library will increase organizational data security, increase compliance, and conduct audit trails.

Increased Data Security

In contract lifecycle management, massive amounts of data are being handled and shared amongst several parties. Managing data security risk is crucial to the success of your contract management system. While traditional paper contract management was highly susceptible to tampering and document loss, digital contract management presents several different security challenges. Contract management software uses encryption and audit trails to increase data security and alert users of warning and data breaches. Additionally, a well-designed contract management software solution allows the administrator to set specific permissions-based access for select users.

Increased Compliance
Ensuring that your business is complaint to specific standards and policies is also a key item to consider. Organizations that regularly manage high volumes of complex contracts must confirm that every document contains the correct clauses, ensuring they are compliant based on both organizational standards and external standards. Managing compliance manually greatly increases the risk potential of your business. So, with the help of dedicated contract lifecycle management software, you can mitigate risk and be sure that every aspect of your contract management process is fully compliant.

Intelligent Audit Trails

One of the most incredible aspects of contract lifecycle management software is that it will run continuous audit trails of your digital contracts to constantly confirm that appropriate clauses are included. Such clauses might contain information pertaining to confidentiality or other information that can detrimentally impact your business if not used correctly. Contract lifecycle management software pinpoints where compliance errors occur so you can modify contracts instantly and secure compliance. In this way, you can be proactive and manage compliance in the moment and as time progresses.


contract clause library allows you to have a more productive, simplified, and organized contract building stage. You can mitigate risk in several ways and increase visibility, transparency, and security by implementing a contract lifecycle management system that includes a contract clause library. Build better communication, collaboration, and working relationships with the help of this simple tool that can maximize results for your business.

Contract clauses are crucial building blocks for creating contracts, so having a clause library can help offer protection and risk mitigation while increasing efficiency, accuracy, and compliance. The best way to move forward is with a contract lifecycle management system that automates workflows.

Today’s industry and business leaders are implementing contract management software, complete with automated workflows, as well as contract template and clause libraries to boost their productivity and reach objectives. Have all of your preapproved clauses at your fingertips and streamline contract lifecycle management for your entire team simply by using a clause library. Maximize your contract lifecycle management strategy today with our Dock 365 Contract Management System. For a free demo, click here.


Disclaimer: The information provided on this website is not intended to be legal advice; rather, all information, content, and resources accessible through this site are for purely educational purposes. This page's content might not be up to date with legal or other information.
Lindsey Paulk

Written by Lindsey Paulk

Lindsey Paulk is a Content Writer in Jacksonville, Florida that specializes in digitally communicating all-things contract management
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