Contract management Glossary

A data room is a virtual, locked location that is used to share information. Only people with the appropriate authorization have access to the documents shared there. Therefore, data rooms are often used for sensitive business transactions or even legal processes.

Modern contract management software offers the option of creating secure, password-protected data rooms in the cloud and storing all documents for exchange there. All authorized employees, as well as external partners, access it and work on it together or even simultaneously.

In everyday language, the term “digital signature” often refers to the electronic signing of contracts. If electronically transmitted and signed documents meet certain legal requirements, they acquire the same legal status as those in paper form. The requirements for this are found in the eIDAS regulation – regulation (EU) no. 910/2014 – which lays down uniform rules for digital transactions throughout Europe.

Therefore, it defines three levels of electronic signatures:

• the simple electronic signature (SES)
• the advanced electronic signature (AdES)
• the qualified electronic signature (QES)

The more criteria the electronic signature fulfills, the higher the legal validity and evidential value of the signed document.

A digital archive refers to a place for the electronic storage of documents of any kind. This includes files, certificates, invoices, images, correspondence and much more. In addition, business and legal requirements regarding retention periods must be met. The audit-proof and GoB-compliant archiving is proven by the certificate according to IDW PS 880. The electronic storage of data not only helps to preserve important information in the long term, but also prevents lengthy searches in location-based filing systems or paper files in office cabinets.

The simple electronic signature represents, as the name suggests, the first level of the digital signature. Here, there are no requirements for the person signing to prove his or her identity. Even an e-mail signature or a scanned signature fall under the simple electronic signature. Since there is no method for proving identity, the SES is very uncertain and is subject to the free assessment of evidence by the court.

Scanned in, the handwritten signature is considered a "simple electronic signature" in accordance with the EU's eIDAS regulation - but encrypted, it corresponds to the "advanced electronic signature". This makes it ideally suited for digitally signing contracts. The requirements here are high: the signature must be unique, forgery-proof and verifiable. Encrypted transmission ensures unique identification of the signatory and protects the document from unauthorized access or changes.

Deadlines and dates are key contractual components and define the legal scope for action on the timeline. It is crucial to be informed in good time and to act in a well-coordinated manner across departmental boundaries. Reliable deadline management provides an overview of all upcoming events, eliminates risks and creates competitive advantages. Thanks to Microsoft Outlook linking, there is a connection between each deadline and the associated digital agreements - without media disruption. This saves manual, redundant maintenance of lists and calendars as well as cumbersome searching for contract details.

Legal matter management encompasses the documentation and management of all legal matters arising within the company and from cooperation with external partners. These legal matters range from investigations, claims and compliance to disputes or court cases and legal consultations.

Digital matter management makes it possible to efficiently collect, manage, and store in a structured manner all information and documents that arise in relation to the respective cases. Examples of corresponding documents are searches, minutes, correspondence, resolutions, expert opinions, invoices and, last but not least, contracts.

A media disruption occurs when a system change takes place during the transfer of information. Redundant work steps and different versions are the result. In contract management, this means that data from agreements that has already been digitized can no longer be further processed in the program used at a certain point. A typical example of this is the missing link between contract lists in conventional spreadsheets and the associated contract documents. Using a system with a single point of truth prevents this.

Metadata helps to identify and sort unstructured information. In the context of contract management, for example, this includes contract type, partner, amount, or start and end dates. Intelligent contract management software automatically reads out the data contained in agreements when they are digitized. In addition, a smart tool enables the simple and intuitive expansion of metadata.

Optical character recognition (OCR) is a technology that recognizes letters contained in scanned documents, screenshots or images and assembles them into words and ultimately into entire digital texts. This facilitates both further processing and retrieval in the contract archive using a semantic full-text search.

The most secure form of digital signature is the qualified electronic signature. In addition to the properties of the advanced electronic signature, the QES must meet the following requirements:

• The signers can be clearly assigned.
• The identification of the people is beyond doubt.
• The signature is created by a qualified electronic signature creation device.
• Subsequent changes to the signature data are traceable.
• The signature is based on a qualified certificate for electronic signatures.

Thanks to these additional security standards, the qualified electronic signature has the same legal validity throughout the EU as the handwritten signature.

Audit security refers to the way in which data is stored in electronic archive systems. According to the GoBD (principles for the proper keeping and storage of books, records and documents in electronic form), data is considered audit-proof if

• the original document remains unchanged. In the event of adaptations, a new version must be created.
• the documents are secure against loss, both in the archive and during transfer.
• they remain unchangeable, i.e. protected against forgery and manipulation.
• the data is available without gaps and at any time. This includes the fastest possible saving of changes and their complete traceability.
• they can be read and analyzed with standard programs (e.g. Adobe or Microsoft Office).

"Single point of truth" (SPOT), also known as "Single source of truth" (SSOT), stands for data storage bundled in one place, often by using the cloud. A single point of truth creates the prerequisite for collaboration without media discontinuity between all people involved and prevents the existence of different versions.

Versioning is used in document management to record changes in documents or folders. The system records each revision made by the person editing the document and saves that version anew. Timestamps and user recognition make it possible to trace the collaboration of all those involved and to restore any version along the timeline.

Every contract goes through different phases from creation to archiving, which together form the contract lifecycle. These include contract creation, negotiation, approval and fulfillment, as well as controlling, deadline management and archiving or destruction of documents.

A well thought-out contract lifecycle management (CLM) with the help of smart contract management software helps to efficiently control the contract lifecycle.

Contract management comprises the administration and control of all agreements of an organization. The goal is to maintain an overview at all times and to efficiently design the work processes surrounding their administration. The main tasks of contract management include:

• Creation of contracts and (re)templates
• Administration and audit-proof archiving of all documents
• Handling of review, approval and release processes
• Deadline management
• Evaluation and reporting

Contract management software, also called contract administration software, is a tool for the digital administration and control of contracts. The basis for this is a database in which all documents are stored in a structured manner. Modern solutions contain numerous intelligent functions to optimize work processes related to contract management. These include:

• Digital contract archive
• Semantic full text search
• Digital signature
• Standardized workflows
• Tested template and clause libraries
• Integrated calendar
• Simple drag-and-drop function for contract digitization
• Customizable lists and reports
• Integrated legal matter management
• Standardized inquiry management