Contract Execution Phase: Everything You Need to Know
The contract execution phase involves actions like signing the contract as the first step and after that, the parties can perform their contractual obligations.3 min read
The contract execution phase involves several actions that are necessary for initiating the contract. For example, signing the contract is the first step in the execution phase, and after signing the contract, the parties can perform their contractual obligations.
What is Contract Management?
Contract management has become an important daily task for many businesses. As a business grows and enters into more contracts, it is important to make sure that managing these contracts does not cost the business time and money. Unfortunately, if a business does not have an automated contract management solution in place, it's likely that managing contracts will reduce productivity and require hiring more employees.
Examining the contract management process can help businesses limit the amount of time they need to spend dealing with these agreements. While contract management can be time-consuming, having numerous contracts can help a business generate revenue and establish long-lasting relationships with clients.
Almost every business can benefit from an automated contract management platform that can handle a contract throughout its life cycle. Contract management platforms can simplify several important tasks related to contracts:
- Reducing risk and issues with compliance.
- Streamlining the negotiation process.
- Using e-signatures to speed up contract execution.
- Managing signed documents.
More and more companies are turning to contract management platforms in order to reduce their costs and eliminate risks. Using a contract management platform can help a business avoid the need to have one of their employees handle tedious management tasks such as tracking contract dates and filing physical documents.
Preparing a Contract
The first stage of contract management is preparing the contract. During this step, you should think about your needs, establish your goals for entering into the contract, and determine the risk involved with the agreement. Because contracts are legally binding, it's important to do your due diligence before signing the contract.
Before entering a contract, you should make sure that your business is legally and financially protected. For instance, the contract should describe what needs to take place if a client decides to sell their company or declares bankruptcy.
Writing a Contract
Writing a contract is the next stage in contract management. To make sure you have correctly-written contract, it is best to hire an attorney. If you use in-house counsel to write your business's contracts, it may be a good idea to construct a contract template that can be easily updated to include necessary terms and condition.
Be sure that you are paying attention to the wording used in a contract. Specific wording is best, as using unclear language can result in contract disputes. You also need to consider the laws that will apply to the contract. If the parties are in different locations, the contract will need to be written so that it complies with applicable regulations in each location. After the first draft of the contract is complete, the parties can negotiate terms before finalizing the agreement.
Contract Execution Phase
The most important stage of contract management is the contract execution phase, which involves the signing of the contract and the initiation of the agreement. By taking care with the other stages of contract management, including writing and negotiation, executing the contract should be simple.
One possible difficulty in signing a contract is that the parties may be in different parts of the country or even the world, meaning it might not be possible for them to sign the contract in person. To ensure that all parties can sign the contract by the required deadline, using a legally binding e-signature is a good solution.
In addition to signing the contract, several other activities may need to take place during contract execution to start the agreement. For example, one of the parties may need to procure a good or begin a relationship with a customer. By using an e-signature instead of a physical signature, these activities necessary for contract execution can take place much sooner.
Electronic signatures can speed up the signing period of a contract by several days. In addition, using electronic signatures can increase security, as contracts do not need to be physically delivered to the parties for signatures. After all parties have signed the contract, it should be filed. Electronic filling will make it much easier to find contracts in the future.
If you need help with the contract execution phase, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.