Contracts are legally binding, so their content needs to be written carefully. In most organizations, a contract owner needs the approval of their superiors and other internal stakeholders to send a contract document to the counterparty for negotiation. 

An approval process can improve compliance and reduce risks by ensuring that the stakeholders are aware of the content of the contract.

In Zoho Contracts, you can set up approval workflows based on contract types. When a contract is submitted for approval, the approvers can add contextual comments in the document as well as approving or rejecting it. The comments will be available to the contract owner, who can edit the contract document based on the comments. For more information on how to set up an approval workflow, see Setting Up an Approval Workflow. 

Approval Workflow

An approval workflow defines the approvers of a contract and the approval process it has to go through. An administrator can create multiple approval workflows and choose a workflow for each contract type. To learn how to build contract types and associate them the with workflows, see Contract Types. 

Note: It is not mandatory to have an approval workflow for every contract type. Contract owners can send the contracts directly for negotiation after the draft is completed if no approval workflow is associated. 

• Sequential
  
• Parallel
  

Sequential Workflow

In a sequential workflow, the order of approval is clearly defined. The administrator can choose the approvers for each level of approval while adding or editing the workflow. 

The contract can only move to the next level after one of the approvers in the current level approves it. The contract moves to the Approved state after it is approved in the final level. 

Parallel Workflow

The parallel workflow is a flat model, and there is no specified order of approval. The approval request is sent to all the approvers simultaneously. A contract only moves to the Approved state after all the approvers approve the contract. 

Note: 

• When a contract is in the Approval Pending state (in both parallel and sequential workflow), the contract owner cannot make changes to the contract document. 
  
• In the case of parallel workflow, the contract owner cannot make changes to the contract document if any of the approvers reject the contract. They have to wait until the rest of the approvers approve or reject it.