CEO Blog 9: How do I extract contract obligations? And what do I do with the information?
Obligations and rights in a contract!
Typically, in a contract, there is no specific section with says “Obligations”. Obligations and rights are strewn throughout the contract. Obligations typically say things like “Party will do…”, “Party shall do…”. Rights are typically outlined as “Party has the right to audit….”, “Customer may extend the agreement…”, “Customer is entitled to terminate the agreement…..” etc.
These can be categorized further. You need to outline the different categorizations that you want to track – audit rights, audit obligations, etc. They may be time-bound (which can be captured) or triggered by a certain event.
Start by designing a spreadsheet on what data you need to capture, what to look for, what are the categories for the obligations and rights, and decide what parameters you need to capture along with these (time-bound, triggers, etc.)
Designing this is the key to success.
This needs to be followed by actions. What do you want to do if certain information is present?
Once this full design is done, then it can be configured in your CLM system to accept the data from the spreadsheet.
Previous blogs outline the methods to extract the data of contracts.