{"revision":"c10276e953456835cdbb1f3a60d58ae1980be353","document":{"id":50268,"path":"source-to-pay-operations/sourcing-and-procurement-operations/contracts.md","title":"Contracts","bundle":null,"doc_type":null,"release":"australia","body":"\n# Contracts\n\nA contract defines the terms and conditions along with pricing agreed for a product with the supplier​. An active contractual price determines if the pricing of a product or service is displayed on ShoppingHub.\n\nUse the purchasing view to view contract details in the Sourcing and Purchasing Automation module. You can also create a new contract with the contract\\_manager role.\n\nIn addition to purchase requisitions, systematic creation of a contract occurs during a sourcing request or negotiation. This is configured accordingly in flow designer. The various scenarios for pre-purchase contract creation are:\n\n- Negotiation exists, created manually: Trigger contract creation, including NDA if required, against the negotiation when the state of the negotiation is Planned.\n- Negotiation exists, created systematically through third-party sourcing integration: Trigger contract creation, including NDA if required, against the negotiation when the state of the negotiation is Negotiation in Progress.\n- Negotiation does not exist: Trigger NDA contract creation, if required, against the sourcing request when the state of the sourcing request is Awaiting Supplier Response. A procurement specialist or contract team can manually create other contracts against the sourcing request before creating a purchase requisition. If contracts are not manually created against the sourcing request, they are systematically created against the awarded purchase requisition after approvals are complete.\n- New supplier created from manual sourcing or third-party sourcing integration: For third-party sourcing integration, trigger contract creation when a new purchase line is created for a new supplier. For manual sourcing, contract creation follows the manual negotiation creation or negotiation does not exist scenarios.\n\nWhen a supplier is awarded, contracts that were created for the other suppliers are canceled, except NDAs. Contract metadata population remain as is.\n\nIn a contract, the following are the key fields:\n\n\n
\n\nField\n\n\n\nDescription\n\n
\n\nContract model\n\n\n\nType of the contract.\n\n
\n\nSupplier\n\n\n\nSupplier that is billed for this contract.\n\n
\n\nContract number\n\n\n\nUnique identifier for the contract that the vendor assigns.\n\n
\n\nName\n\n\n\nShort description of the contract.\n\n
\n\nParent contract\n\n\n\nParent contract or agreement, if any.\n\n
\n\nStart date\n\n\n\nDate from which this contract is effective.\n\n
\n\nEnd date\n\n\n\nDate on which the contract ceases to be effective.\n\n
\n\nState\n\n\n\nStatus of the contract. For example, **Draft**, **Active**, **Expired**, or **Canceled**.\n\n
\n\nSubstate\n\n\n\nSubstate of the contract. For example, **Awaiting Review**, **Under Review**, **Approved**, or **Rejected**.\n\n
\n\nLicense quantity entitled\n\n\n\nNumber of licenses included in the contract. This field is available for Maintenance and Software License contracts.\n\n
\n\nContract administrator\n\n\n\nPerson responsible for managing the contract and interacting with the vendor.\n\n
\n\nApprover\n\n\n\nUser who approves or rejects the contract.\n\n
\n\nBusiness owner\n\n\n\nInternal user responsible for the product in the contract.\n\n
\n\nAgreement type\n\n\n\nLicense classification of the contract.\n\n
\n\nDescription\n\n\n\nDetailed description of the contract.\n\n
\n\nPurchasing\n\n
\n\nPurchasing entity\n\n\n\nThe purchasing entity associated with the contract.\n\n
\n\nPayment term\n\n\n\nThe agreed to time and conditions under which a payment to a supplier is made.\n\n
\n\nIncoterm\n\n\n\nDetermines who assumes the liability and when a fixed asset must be capitalized.\n\n
\n\nFinancial\n\n
\n\nInvoice payment terms\n\n\n\nTerms that explain how to pay the contract. For example, **Net Monthly Account** or **Net 30**.\n\n
\n\nPayment schedule\n\n\n\nSchedule that defines when to make payments. For example, **Monthly** or **Annually**.\n\n
\n\nPayment amount\n\n\n\nAmount paid for this contract so far.\n\n
\n\nApplicable taxes\n\n\n\nTax applicable for this contract. Select from **Exempt** or **Sales**.\n\n
\n\nEffective tax rate\n\n\n\nTax rate applicable to the total cost.This field is visible only if the applicable taxes is selected as **Sales**.\n\n
\n\nTax cost\n\n\n\nTotal tax on the contract.This field is visible only if the applicable taxes is selected as **Sales**.\n\n
\n\nTotal cost\n\n\n\nFinal cost of the contract after adjustments have been applied. If a contract has one or more rate cards, this field shows the combined value of all rate cards.\n\n
\n\nVendor account\n\n\n\nAccount of the vendor with which the contract is associated.\n\n
\n\nPO Number\n\n\n\nPurchase order associated with this contract.\n\n
\n\nCost center\n\n\n\nCost center that is financially responsible for the asset.\n\n
\n\nHas rate card\n\n\n\nDetermines if the contract has an associated rate card.\n\n
\n\nRenewal\n\n
\n\nAutomatically renew\n\n\n\nIndicates if the contract can be renewed at the end of its term.\n\n
\n\nOptions\n\n\n\nDuration of the contract renewal or extension. For example, 1 year.\n\n
\n\nRenewal start date\n\n\n\nDate on which the contract renewal or extension takes effect.\n\n
\n\nRenewal end date\n\n\n\nDate on which the contract renewal or extension ends.\n\n
\n\nCost adjustment type\n\n\n\nType of cost adjustment applied to the contract: **Fixed**, **Manual**, or **CPI** \\(consumer price index\\).\n\n
\n\nCost adjustment amount\n\n\n\nNumerical increase or decrease in price of contract. To indicate a decrease in price, enter a negative number. Either a **Cost adjustment** or **Cost adjustment percentage** can be specified, but not both.\n\n
\n\nCost adjustment percentage\n\n\n\nPercentage increase or decrease in price of contract. To indicate a decrease in price, enter a negative percentage. Either a **Cost adjustment** or **Cost adjustment percentage** can be specified, but not both.\n\n
\n\nTerms and conditions\n\n
\n\nSpecific legal information in the contract.\n\n
The following are the related lists of a contract:\n\n|Related list|Description|\n|------------|-----------|\n|Child Contracts|Lists any child contracts that exist for this contract.|\n|Expense Lines|Lists all expense lines for this contract.|\n|Assets Covered|Lists all assets covered by this contract.|\n|CIs Covered|Lists all configuration items \\(CI\\) used in this contract.|\n|Service Offerings|Lists all service offerings from this vendor. Activate Service Portfolio Management to see this related list.|\n|Approval History|Lists all approvals for this contract.|\n|Contract History|Displays the changes to the start and end dates of this contract and changes to the terms and conditions.|\n|Purchase Requisitions|Lists all the purchase requisitions associated with this contract.|\n|Purchase Orders|Lists all the purchase orders associated with this contract.|\n|Supplier Products Covered|Lists all the supplier products covered under this contract.|\n|Pre-payments|Provides information of the pre-payment details such as the amount and the payment date for this contract.|\n\n## Contract exception rules\n\nContract exception rules specify conditions in which a contract record is not created even if there is a corresponding contract type mapped to a model category. A procurement administrator​ can configure these rules from decision tables which are in the administration section of the Sourcing and Purchasing Automation module.\n\n**Parent Topic:**[Sourcing and Purchasing Automation](https://raw.githubusercontent.com/ServiceNow/ServiceNowDocs/australia/markdown/australia/source-to-pay-operations/sourcing-and-procurement-operations/purchase-experience-workflow.md)\n\n"}}