Managing a master contract

Last updated
Save as PDF

Overview

General Master Contract is an agreement between contract parties. It may concern subsequent purchases of good or services, non-disclosure of shared information or other consent. In the master contract, basic terms of cooperation are stipulated while subsequent purchases are documented with purchase contracts.

Master contracts are located along with the volume license agreements under the Master Contracts in the Contracts application.

Navigation groups all master contracts and volume license agreements by their statuses:

Effective displays contracts whose expiration date is greater than now and status is one of the following: Canceled, Active, Litigated, Pending.
Expiring displays contracts whose expiration date is either today or within 90 days and status is one of the following: Canceled, Active, Litigated, Pending.
Open displays contracts with the following statuses: Submitted, Draft, Signed, Approved, Legally Reviewed, Rejected, Postponed, Content Reviewed.
Historic displays contracts with an expiration date in the past.

How to create a master contract

You can store the essential information of a master contract in the following fields on the General tab:

Contract Number
Title
Closing Date
Business Partner
Legal System. Country whose legal system is applicable if parties disagree about the interpretation or fulfillment and want to have recourse to the courts.
Place of Jurisdiction. Location of the court that is eligible for any legal intervention from the counterparties. If you select Other, the Other Place of Jurisdiction field becomes editable and you can provide the details.
Expected Volume. Estimated amount of turnover that will be generated by this contract during its validity period. The field is not required. However, if it is filled in, its value will be used in the corresponding report as a planned amount in comparison to the actual volume.
Internal Signer
Internal Contact
External Contact

In order for the contract to be valid in terms of contract management processes, you should also fill in the Effective Date and Expiration Date (or select Contact does not expire) on the Period tab.

Renewing expiring master contracts

On the Period tab, you can set up automatic renewal for your master contract:

Select the Renews upon expiration checkbox.
Specify the Renewal Period and Time Unit.

If you enable automatic renewal, the system will update expiration date information according to the given settings automatically when the current expiration date arrives. In case of the first automatic renewal, the original expiration date will be stored in the corresponding attribute for transparency.

Automatic notifications about the contract renewal

For the guideline, please refer to Automatic renewal notifications for purchase contracts.

Setting expiration notifications

For the guideline, please refer to Setting expiration notifications for contracts.

Managing terms of cancellation

Usually contracts may be terminated on request prior to agreed expiration date during a period of time by end of month, end of quarter, end of year, etc. This cancellation term is defined in the By field providing a list of possible values. In case that early termination must not be possible before a certain date, the corresponding day must be set in Not Before.

The period of cancellation is configured by the values of the Period of Notice and Time Unit fields.

Example: If a contract can be cancelled 4 weeks before the end of each quarter at the latest, specify 4 as period of notice, weeks as time unit, and End of Quarter in the By field.

The Cancellation Effective On field shows the closest possible date of cancellation taking into account the Not Before value. Based on the closest possible cancellation date and period of cancellation notice, Notice Deadline is calculated. It displays the latest date when you can inform another party of your intent to cancel the contract.

Example: if a contract can be cancelled 5 days before the end of month and today is March 5, the Cancellation Effective On will be March 31 and the Notice Deadline will be March 26.

Consider enabling the cancellation notification option. This will send an email to the given recipient (and all people in the Reminder Copy list) whenever the next period of notice is due (this date is specified in Notice Deadline). This allows you to review your options whether to terminate the contract or not. Enter a numeric value in Days in Advance to define how many days prior to the notice deadline you want to be reminded.

If current status of an agreement is set to Cancelled, the Canceled On field contains the date entered in the Change Status wizard. It is the day when the contract was cancelled.

Setting cancellation notifications

For the guideline, please refer to Setting cancellation notifications for contracts.

Cancelling a contract

To cancel a contract, run the Change Status action. When you change the contract's status to Cancelled, the wizard shows the Canceled On field. Use it to enter the date when the termination takes effect as agreed by both parties. This date is deemed the day when the notice was given if the period of cancellation notice is set up in the contract. Therefore, the Canceled On date is taken into account for calculating the Cancellation Effective Date. If the Canceled On date is in the past, and the system calculates that the Cancellation Effective Date is also in the past, the contract becomes expired immediately. If the Cancellation Effective Date is not yet reached, the contract status becomes Cancelled and changes to Expired upon reaching the cancellation effective date. While the contract's status is Cancelled, its items remain in the Active status.

If the period of notice is not specified for the contract and the Canceled On date is in the past or today, the contract and its items become expired immediately.

Services

You can associate your agreement with catalog services on the corresponding page. Note that a service can be connected with one volume license agreement only.

This relation has neither functional impact nor side-effect. It is for your transparency only.

Contract family and related contracts

The Contract Family page shows connections to other master contracts if any. Any master contract or volume license agreement (including the legacy types) can be selected here.

The Procurement tab displays contracts and contract items that belong to this master contract. You can also associate your master contract with procurement personnel on Procurement > Purchasers.

Saving links to files

The Documentation > Linked Documents tab can store links to digital documents located on a network drive and online. Both a network link and a web link should lead directly to a file and therefore end with an extension (with .txt, .mp3, .jpg, etc.). To be able to add links to network folders, you need to modify your browser settings.