Contract administration or contract management manages different contracts made by vendors, customers, employees, or partners. Therefore, contract management comprises the terms and conditions, negotiation, and ensures full compliance and agreement and notes any amendments or changes arising during execution or creation. In summary, contract management is the process of efficiently and systematically executing, analyzing, and creating the goal of maximizing operational and monetary performance and lowering risks. Standard contracts of commercial nature may include sales invoices, employment letters, utility contracts, and purchase orders. However, complex contracts help create highly regulated goods and services with detailed technical specifications, projects, intellectual property agreements, international trade, and outsourcing (Gupta et al., 2015). The contract management software may apply on larger contracts to assist in administration among numerous parties. Research shows that the application of contract management policy in organizations helps reduce risks and make a better assessment.
On the other hand, the Contract Lifecycle is the practical, procedural management process of a contract from commencement through compliance, ward, and renewal. Therefore, the implementation of contract lifecycle management policy can result in substantial developments in efficiency and cost-saving. Besides, automating and comprehending the contract lifecycle process may reduce an organization's liability and increase legal requirements compliance. The contract lifecycle has various significant steps, such as capture, whereby people need to get their existing paper contracts in a centrally visible place (Pecherskaya et al., 2016). If someone is not aware of the contracts they have, they also do not know the potential exposure of risks in the contract. Another step is tracking, whereby; people track all vital information in the contract so that they do not miss any suggestion proposed. However, other steps in the cycle may include approving, negotiating, signing, and analyzing the contracts.
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In conclusion, when formulating a contract, the contractual capacity is called a contracting competency or capacity. Therefore, when engaging in a legally binding contract, some people may lack the competence or capacity to contract with others. Therefore, for an agreement to be legally binding, both parties need to show a level of competency and capacity to contract. Consequently, contracting competency means that both parties are aware that there is a formation of a contract and can also interpret the contract's basics and nature (Turner & Simister, 2017). When a party is not aware of the results and nature of an agreement that they enter, the law declares that the party lacks the capacity or competence to develop a legally binding contract. Nevertheless, contractual competencies do not connect to someone's skill in negotiating or bargaining a contract.
References
Gupta, R., Karayil, A., & Rajendran, R. (2015). Contract Lifecycle Management. The DNA of Procurement. Building Tomorrow's Enterprise. Infosys .
Pecherskaya, E. P., Averina, L. V., Kochetckova, N. V., Chupina, V. A., & Akimova, O. B. (2016). The methodology of contract managers' project competency formation in CPE. International Electronic Journal of Mathematics Education , 11 (8), 3066-3075.
Turner, J. R., & Simister, S. J. (2017). Project contract management and a theory of organization. International journal of project management , 19 (8), 457-464.
