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
- 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.
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, specify 4 as period of notice, weeks as time unit, and End of Quarter in the By field.
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 of effective termination provided in the Change Status wizard.
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