Contract Clause – An Overview of How Contracts & Clauses Come To Be

09/13/22

CobbleStone Software gives an overview of how contracts and clauses come to be.

Contract clauses and contracts themselves are built into the identity of the United States and so many other great nations. With the help of historic Supreme Court rulings, the contract and the contract clause were weaved into the cultural fabric of US society.

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Protecting The Contract & The Clause

Article I, Section 10 of the US Constitution (aptly enough, commonly deemed “The Contract Clause”) details the promise that no state court or governing law enforcer shall pass any law impairing the obligation of contracts – which are a given right. This clause itself protects individuals’ and organizations’ rights to enter into private contracts and establish contract clauses with whichever parties agree to the terms of the contract by law.

This ideal form of contractual protection to engage in contracts and clauses is not always perfect, however. State laws can be passed via legislation that could theoretically regulate specific industries. This use of police power to legislate could theoretically affect – or interfere with – contracts and effective contract management thereafter.

Nonetheless, the Constitution prohibits states from passing legislation that directly targets specific individuals or businesses. As such, they are free to engage in the elements of a contract as they see fit.

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Contracts & Clauses In Action

Clauses are legally binding provisions within contracts, agreements, and other legal texts. Clauses – when managed properly – can save time and streamline contract drafting and negotiations – allowing frequently-used and standard text to be maximized with contract templates and easily insertable clauses. Common clauses include:

  • intellectual property clauses.
  • indemnification clauses.
  • amendments.
  • confidentiality clauses.
  • legal notices.
  • real estate contingency clauses.
  • arbitration clauses.

The Negative Impacts of Failed Clause Administration

General counsel, corporate counsel, business law firms, and all other contract managers must efficiently manage contract clauses – lest they suffer:

  • inaccurate contract language.
  • failure to meet compliance rules.
  • Increased risk and risk exposure.
  • contract workflow.
  • delayed contract review and contract approval.
  • slow contract execution.
  • breach of contract.

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A Better Way to Manage Contract Clauses

Better clause management can come from the use of user-friendly contract management software.

With leading CLM software, contract managers can:

  • Quickly generate documents that are timely, accurate, and compliant that merge with their pre-approved clauses.
  • Clearly route clause approval with contract data fields, section and clause order, and workflow automation. Rules-based clauses can be defined for contract documents.
  • Control access with user permissions for contract clause version access and comprehensive clause approval routing and audit trails. Rules for standard clauses fallback clauses, and others can easily be configured per an organization’s needs.

A Deeper Look at Clause Management With CLM Software

Now that we know the benefits of clause management with contract management software, how does it work in practice?

First of all, organizations are encouraged to maximize a robust contract database. Here, they can store virtually unlimited pre-approved clauses, standard clauses, alternative clauses, fallback clauses, and templates.

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Organizations can also leverage the ability to easily access and insert clauses as redlines per their user permissions configuration. With the ability to dynamically merge contract metadata with clauses from their pre-approved library, contract managers can enjoy a streamlined and intelligent process.

Situational and specific templates can prepare contract managers for a diverse array of business situations. Templates can be leveraged for specific situations such as those that necessitate FAR, DFAR, and GSA contracts and clauses. CLIN management (contract line item number management) can help organizations virtually effortlessly insert line items into contract templates.

With clause ownership, contract software can alert clause owners of when another person attempts to edit an assigned document – seamlessly adding the clause owner to the approval process.

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Contract Clause Management & More With CobbleStone®

Now you are aware of some of the history behind contract clauses, the deleterious effects of improper clause oversight, and how to manage clauses with contract lifecycle management software. It’s time to choose the solution that offers all of the contract clause features above and almost countless others. The solution you need is CobbleStone Contract Insight®.

CobbleStone is an award-winning contract lifecycle software that has received near-unanimous acclaim from customers, third-party analysts, and many others.

CobbleStone users can easily oversee contract clause management with robust proprietary VISDOM® AI and a vast repository of mergeable templates and clauses. Users can easily exercise their right to engage in contracts with contract clause management features and many others.

CobbleStone– as a provider – boasts a litany of success stories from organizations around the globe, of ranging industries in both the public and private sectors. It’s no wonder why CobbleStone is named the CLM leader in the SPARK Matrix™ Report of 2022.

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Book a free demo with a CobbleStone expert to see these contract clause features and other features that can help your organization manage the contract lifecycle stages. Ready to try CobbleStone out for yourself? Enjoy a free trial of CobbleStone Software today.

CobbleStone Software offers a complimentary demo.

*Legal Disclaimer: This article is not legal advice. The content of this article is for educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.

Sean Heck

Written by Sean Heck

Sean Heck is Content Marketing Manager at CobbleStone Software

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