Overview  

Configuring Contract Types is one of the fundamental setup steps to get started with Zoho Contracts. Every organization enters into numerous agreements with various parties, such as vendors, employees, partners, and customers, for different purposes. A contract type is a mold that defines the primary attributes of a contract and has an associated contract template.

The primary attributes include the contract category, intent, and approval workflow to be associated. A contract owner just has to pick a contract type at the time of contract creation rather than defining these attributes for each contract. The templates make it easier for members to author contracts. They only have to fill a few fields, choose the suitable language from each clause, insert new clauses or remove existing ones, and make context-specific edits to the template, instead of authoring an entire contract from scratch.  

Zoho Contracts has 14 built-in contract types that come with predefined contract templates. Examples of contract types in Zoho Contracts include Non-Disclosure Agreement (NDA) and Master Service Agreement (MSA). You can also create new contract types and build your own templates.

The contract type template comprises of five parts:

• Title

• Intro Text
  

• Clauses

• Ending Text

• Attachments

Title

Intro Text 

The Intro Text of a contract defines the background and the context of the agreement. It consists of details such as the parties involved in the agreement, the agreement date, and the place of jurisdiction.

Each contract type template will have two variants of the Intro Text based on the effective date of the contract. The effective date could either be From a Specific Date or On Execution.

At the time of contract creation, the contract owner chooses On Specific Date in the Contract Effective Date field, if the contract has to become active on the specified date after both parties sign the contract. If On Execution is chosen, the contract becomes active when both parties sign the contract.

Clauses  

A clause is a provision in a written agreement or contract to address a specific aspect of the overall agreement's subject matter.

When you build a contract template, you can either insert the clauses from the clause library or add and insert new clauses directly. The latter will be added automatically to the Clause Library.

The clause library in Zoho Contracts allows a standard language and multiple alternate languages for each clause. You can leverage this functionality to avoid numerous contract types for slightly varying contractual needs, and create alternative languages for the clauses while building the contract type template.

Ending Text    

The ending text of a contract contains placeholders for the signature of the parties involved and their details.

Attachments 

An attachment is a single or a collection of information attached at the end of the contract as accompanying documents that fulfill the clear understanding of certain aspects explained in the agreement.

Contract attachments are of different types, such as Appendix, Schedule, Exhibit, etc. Each of them serves different purposes based on the context of the agreement.

An appendix is a supplementary document and plays a critical part in an agreement in some cases. It fulfills the purpose of better understanding a specific language used in a contract. For example, you can explain the quantity, exact time, procedures, and logistics used for delivery of goods and services mentioned briefly in the Deliverables clause in a Catering Services Agreement with the help of an Appendix.

Schedules are a definitive part of an agreement and are used to elaborate the details in an agreement to keep the clauses short and less complicated. For example, a Sales Agreement uses a Schedule to list the prices of the items sold in a tabular format.

Exhibits are also supplementary parts of an agreement that can be templates, specimens, or standalone agreements integral to the contract. For example, an organization can use a Regular Data Audit Agreement to monitor and prevent data breaches during the employee's tenure as an Exhibit with a standard Employment Agreement.

Benefits of Contract Type Templates   

• Contract authors save a significant amount of time during the authoring phase, as the first draft of a contract can be created just by filling a form and making a few clicks.

• Templates drastically bring down the chance for human errors at the time of authoring.

• Templates empower even employees with limited legal expertise to author contracts while also ensuring language consistency across contracts.

• You can minimize the dependence on legal experts at the time of contract authoring. For commonly-used contracts, you can even entirely avoid it.

• You achieve faster approval cycles, as you insert clauses into the template from a clause library with legally approved clause languages.

• You can easily introduce organization-wide policy changes and regulatory reforms by editing the contract type templates.

• You can invest the time saved during the authoring and approval phases on high-value tasks, such as refining your CLM process to ensure better compliance.