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Contract Management Defined

Manual contract management is complicated and lends itself to a high degree of human error. Human errors such as entering data incorrectly into a contract, missing a deadline for product delivery, or late payments are costly.

Contract management is a complex process involving many moving parts. A contract is created, then approved by the sending party, then negotiated or approved by the receiving party. Each step in the contract process, or stage, is known as a workflow stage. Workflow stages are conditions that contain tasks that must be performed for a contract to be signed by all parties. Workflow stages can be the responsibility of either the sending party or the receiving party or all parties.


Contract management accuracy is important. Managing contracts is complex because each contract has a slightly different progress status along its workflow. Each workflow stage can be different lengths and follow a different timeline. Contracts vary in other ways too. Each contract has a different dollar value and involves different parties. Each contract has different details to enforce at different effective dates. Contract management is the process of keeping abreast of the progress of each contract.


Contract Management Options

Manual contract management is complicated and lends itself to a high degree of human error. Human errors such as entering data incorrectly into a contract, missing a deadline for product delivery, or late payments are costly. SpringCM reports that 92% of the respondents from a survey of 1,409 companies in 2018 stated that contract management errors were attributed to human error. Usually, the breach of contract risk cost is higher than the cost of purchasing software to manage contracts. Thus, a contract management system software is a common choice. In 2018, reported that “60% of companies used email to manage contracts, and 32% of companies used a contract management software. 6% of companies said they had no contract management process in place.”

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Contract Life Cycle Steps

  1. Parties contact each other to exchange items of value
  2. Buyers make an offer and sellers decide whether to accept the buyer's offer
  3. Buyers and sellers negotiate terms
    1. If an agreement is not found, the contract life cycle ends
    2. If an agreement is found, the contract life cycle proceeds
  4. Tasks are completed within each workflow stage
  5. Workflow stages are completed as conditions to the contract
  6. Upon completion of all workflow stages, the contract is executed with valid signatures from all parties
  7. The exchange of items of value occurs based on the terms of the contract
  8. Contract is monitored through expiry date, and may renew automatically

Two Types of Contract Management

There are two types of contract management strategies, without software (manual) and with software (contract management system software). To create a single contract and see it through its workflow processes to the time of execution still risks human error. Human errors increase during manual contract management when an organization has many contracts and workflows with overlapping timelines. Therefore, it is still a smart idea to use software for contract management, even with a single contract to manage, to reduce human error.

Human Error with Manual or Email Methods of Contract Management

Setting up an email contract management strategy involves:

  • A naming convention
  • File folders – active, pending, signed, negotiations
  • Categories of folders – such as vendors, customers
  • Archive folders for terminated contracts

Human error is likely in any one of the above manual operations. A better strategy for reduced human error is to use software to manage contract pipelines.

Modern Day Contract Management Software

Software to manage contract pipelines is focused on minimizing human error. Many of the steps to accomplish a signed contract between multiple parties occurs through automation. Automation works by setting into motion specific actions based on certain triggers. Possible triggers include:

  • A contract request is submitted
    • Triggers a contract to be created
  • Contract is created
    • Triggers a contract to establish workflows
    • Triggers the first workflow to be initiated
    • Triggers an alert to the contract request creator that the contract has been approved/created
  • A workflow stage is approved
    • Triggers the next workflow stage to begin
    • Triggers an alert to the contract creator to report workflow completion
    • Triggers a separate alert to the contract owner (i.e., company CEO, VP Regional Sales, etc.)
  • All workflows are completed
    • Triggers an alert email sent to all parties in the contract
    • Triggers a separate alert to the contract owner
    • Triggers another separate alert to planning parties that will be arranging the deployment of the contract valuables between parties
  • A workflow stage requires attention
    • Triggers an updated copy of the latest version of the contract to all parties
    • Triggers an alert to the contract owner
  • A contract is sent for signatures
    • Triggers an automatic transmission of the latest version of the contract to all parties
    • Triggers an encrypted eSign portal to capture appropriate and valid signatures on the contract
  • A contract is set to renew
    • Triggers a copy of the renewal template to be sent to all parties
    • Triggers an alert to all parties of the terms for renewal
    • Triggers a separate alert to the original contract owner

The reason for all these triggers is because every contract is going to have a few tasks pending simultaneously. Some of these tasks are the responsibility of the selling party, and some are the responsibility of the buying party. The more communication that is used throughout the contract life cycle, the human errors that will occur throughout the process.


Human error minimalization is a main accomplishment when choosing a software to manage contracts, instead of a manual process. As an organization grows and its contracts pipeline expands to involve multiple parties, using software to manage contracts will save time without losing awareness of the workflow status of each contract. Furthermore, as personnel within an organization changes, the contract management software system remains the same. This allows new users to pickup where old users left off. In contrast, a manual contract management or an email contract management scenario includes setbacks in contract progress, as new personnel are trained to know what past personnel knew or managed. Software use to manage contracts is the preferred method to reduce human error in contract management.  

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.
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Written by Dock 365

Our experts have compiled in-depth guides on legal jargon, fundamental contract procedures, and Dock 365 tips and tricks to help you streamline the contracting process from draft to signature and beyond.
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Reviewed by Naveen K P

Naveen, a seasoned content reviewer with 9+ years in software technical writing, excels in evaluating content for accuracy and clarity. With expertise in SaaS, cybersecurity, AI, and cloud computing, he ensures adherence to brand standards while simplifying complex concepts.

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