Contract Management Glossary

An automatic renewal occurs when a contract continues beyond its end date because neither party gave…

The notice period is the minimum advance notice required to terminate a contract validly on its end…

A contract renewal is the extension of an existing contract for a new period, either automatically,…

Early termination is the ending of a running contract before the contractually agreed expiry date. I…

A pro forma notice is a notice of termination sent solely to activate the notice period and secure t…

A minimum contract duration is the mandatory period during which a contract cannot be terminated by…

The effective date is the date on which a contract's rights and obligations begin, which may differ…

Retroactive effect (also called backdating or retroactivity) means that a contract's terms apply to…

The right of suspension (opschortings­recht in Dutch law) allows a party to temporarily halt performa…

An indefinite-term contract (also called an open-ended or perpetual contract) is an agreement withou…

A warranty period is the period after delivery or completion during which the supplier is obliged to…

A Service Level Agreement (SLA) is a document that defines the measurable performance standards a se…

A license agreement is a contract in which the owner of intellectual property (such as software, a b…

A non-disclosure agreement (NDA), also called a confidentiality agreement, is a contract in which on…

A maintenance contract is an agreement in which a supplier commits to performing periodic maintenanc…

A service contract is an agreement in which a supplier delivers services on a recurring basis for a…

A framework agreement (also called a master agreement or blanket contract) sets out the general term…

Purchase conditions are the general terms and conditions that a buyer draws up unilaterally and decl…

An acceptance protocol is a written document completed at the conclusion of a project or delivery th…

An escrow arrangement is an agreement in which the source code of software or other critical intelle…

Motor vehicle insurance is cover for damage caused by or to a motor vehicle. The mandatory minimum i…

Absenteeism insurance (verzuim­verzekering) covers the employer's statutory sick-pay obligation when…

Buildings insurance (opstal­verzekering) covers physical damage to a building, including fixed instal…

Back-to-back contracting is the principle whereby a main contractor mirrors the obligations and risk…

A deposit agreement is an agreement under which a depositor transfers valuable items, money, documen…

General terms and conditions (GTC) are standard provisions that one party uses repeatedly across mul…

A seasonal contract is an agreement whose term is tied to a seasonal peak in business activity. In h…

A commercial lease is a contract for renting a property or space for business purposes. Lease law di…

Consignment stock is inventory that a supplier physically stores at a buyer's location but retains l…

In a fixed-price contract, the buyer pays a single pre-agreed price for a defined scope of work, reg…

A blanket agreement (also called a blanket purchase agreement or standing order agreement) is an ove…

A letter of intent (LOI) is a pre-contract document in which two parties outline the key terms they…

An addendum is a supplementary document that records changes or additions to an existing contract wi…

A collaboration agreement is a contract in which two or more parties agree to jointly execute a proj…

A penalty clause (also called a liquidated damages clause) is a contractual provision specifying the…

A renewal clause is the contractual provision governing what happens when a contract's term expires…

A price indexation clause is a contractual provision giving the supplier the right to adjust prices…

Retention of title is a contractual provision by which the seller retains legal ownership of deliver…

A warranty is a contractual commitment that a product or service will conform to agreed specificatio…

A bonus-malus arrangement is a performance-linked system in a contract. When the supplier performs a…

Conditions subsequent are specific circumstances defined in a contract under which a party may termi…

With an obligation of result, the supplier commits to delivering a specific, verifiable outcome. Wit…

A condition precedent is a contractual provision that suspends the operation of a contract or a spec…

An authorised signatory is a person who has the legal authority to sign contracts and create binding…

A change order is a formal instruction to modify the scope, schedule, or price of a contract relativ…

An escape clause (also called a break clause or exit clause) is a contractual provision that gives o…

An order of precedence clause (also: precedence clause or hierarchy clause) specifies which document…

Assignment of rights (cession) is the transfer of a contractual right (such as a claim or licence ri…

A data processing agreement (DPA) is a legally mandated contract between a data controller (the orga…

The Uniform Administrative Conditions for the execution of works (UAV 2012) are a set of standard co…

A benchmarking clause is a contract provision that gives one party the right to periodically compare…

Service credits are a contractually agreed compensation mechanism whereby the buyer receives a finan…

A non-compete clause is a contractual provision that prohibits one party from engaging in competing…

A change of control clause is a contractual provision that specifies what happens when one of the co…

A hardship clause is a contractual provision that obliges parties to renegotiate when unforeseen cir…

A chain clause (kettingbeding) is a contractual provision that obliges one party to pass certain con…

A non-solicitation clause prohibits one party from actively approaching or doing business with the c…

An anti-corruption clause is a contractual provision requiring the parties to comply with applicable…

A data portability clause is a contractual provision that guarantees your right to extract, transfer…

A supplier non-compete clause restricts a supplier or vendor from providing the same or similar prod…

An exclusivity clause is a contractual provision that obliges one party to deal exclusively with the…

An intellectual property (IP) clause is the contractual provision that determines who owns the work…

A notification of defects clause is a contractual provision that specifies the timeframe and manner…

An exit clause is a contractual provision governing how the relationship is wound down when a contra…

A compliance clause is a contractual provision that obliges the supplier to comply with all applicab…

Delivery terms are the contractual agreements governing how, when, where, and under what conditions…

A price revision is a contractual mechanism that allows the price of goods or services to be adjuste…

Vendor lock-in is a situation in which switching away from a supplier becomes so costly, complex, or…

Incoterms are standardised international trade terms published by the International Chamber of Comme…

A force majeure clause defines the extraordinary circumstances under which a party is temporarily or…

Direct damages are losses that flow immediately and directly from a breach of contract, without requ…

Consequential damages (also called indirect damages or special damages) are losses that do not flow…

A liability limitation clause sets the maximum amount one party must pay the other in the event of a…

An indemnification clause is an agreement by which one party undertakes to protect and compensate th…

Tort is the legal basis for liability outside of a contractual relationship. A party commits a tort…

A governing law clause is a contractual provision specifying which national legal system applies to…

Motor vehicle liability insurance (WAM, Wet Aansprakelijk­heids­verzekering Motorrijtuigen) is the man…

Cyber insurance covers financial losses a business suffers as a result of a cyber incident, such as…

A dispute resolution clause is the contractual provision that establishes how the parties will resol…

Intellectual property (IP) encompasses the legally protected rights in creations of the human mind:…

Bankruptcy is a court-declared state of insolvency in which a debtor can no longer meet its outstand…

Suspension of payments (Dutch: surseance van betaling) is a court-ordered moratorium granted to a de…

Duty of care is the legal obligation to exercise, when performing an agreement or acting in commerci…

An exoneration clause is a contractual provision through which one party limits or excludes its liab…

Breach of contract occurs when a contracting party fails to perform its obligations, performs late o…

A pledge (pandrecht) is a security right over movable assets (such as inventory, machinery or vehicl…

Supply chain liability is the legal principle that a principal or main contractor can be held respon…

Mediation is a form of dispute resolution where an independent third party, the mediator, guides bot…

Arbitration is a form of dispute resolution where one or more independent arbitrators make a binding…

Profit leakage is the gradual erosion of margin through costs that are unnecessary but largely invis…

Total Cost of Ownership (TCO) is the calculation of all costs associated with a product or service a…

Ghost licences (also known as shelfware or zombie licences) are software licences or subscriptions t…

Statutory interest is the rate of interest that applies automatically when a payment obligation is n…

The Consumer Price Index (CPI) is a statistical measure of the average change in prices paid by hous…

A spend analysis is the systematic mapping of all procurement expenditure within an organisation, st…

A volume discount is a pricing arrangement in which the unit price or rate falls as the volume purch…

Extrajudicial collection costs are the costs a creditor is entitled to charge a debtor for debt reco…

A bailiff's writ is an official document drawn up and served by a court bailiff (gerechtsdeurwaarder…

A notice of default is a formal written notification in which the creditor informs the debtor that a…

Payment default is the legal condition in which a debtor finds itself after failing to pay an invoic…

A direct debit discount is a price reduction granted by a supplier to customers who agree to automat…

A bank guarantee is a written commitment from a bank to a beneficiary (typically the client) that th…

A kickback fee is a hidden payment made by a supplier to an employee or intermediary of the buyer as…

Market conformity is the degree to which a contracted price still reflects current market rates for…

Contract value is the total financial commitment of a contract over its full term, including all fee…

Price escalation is the cumulative increase in contracted prices over time, whether through formal i…

Three-way matching is the process of comparing three documents before approving a supplier invoice f…

The right of retention is the legal right of a creditor to hold on to property belonging to the debt…

Payment terms are the contractual arrangements governing when, how, and under what conditions invoic…

A surety (borgtocht) is an agreement in which a third party (the guarantor) undertakes to pay the de…

Assignment of claims (cessie) is the legal transfer of a receivable by the creditor (assignor) to a…

A purchase obligation is a contractual commitment to buy a minimum quantity or value of goods or ser…

Cost-plus billing (also called post-calculation or cost-reimbursement pricing) is a pricing model wh…

A parent company guarantee is a declaration in which a parent company guarantees the obligations of…

Contract management is the systematic process of managing all contracts within an organisation, from…

An RFP (Request for Proposal) is a formal document inviting multiple suppliers to propose a solution…

An acceptance test is a structured testing process in which the buyer verifies whether a delivered s…

A notice of defect is a written notification from the buyer to the supplier that delivered goods or…

An audit right gives the buyer the contractual entitlement to verify a supplier's books, processes,…

Open-book contracting is a form of collaboration in which the supplier provides full transparency ov…

Public liability insurance covers a business for claims made by third parties (customers, visitors,…

Professional indemnity insurance (PI insurance) covers a professional or service provider for financ…

A subcontractor is a party engaged by the main contractor to perform part of a project or service fo…

A baseline assessment is a structured record of the starting condition before a contract, service, o…

ISO 9001 is the international standard for quality management systems, published by the Internationa…

VCA (Veiligheid, Gezondheid en Milieu Checklist Aannemers, Health, Safety and Environment Checklist…

An exit plan is a pre-agreed playbook describing how the transition from an IT supplier to a success…

Maverick buying is the practice of purchasing goods or services outside established procurement cont…

Procurement synergy is the cost saving achieved when multiple departments, sites, or companies conso…

Supplier relationship management (SRM) is the structured management and development of relationships…

Procure-to-Pay (P2P) is the end-to-end procurement process covering every step from identifying a pu…

Procurement process optimization is the structural improvement of how an organisation purchases good…

Contract portfolio management is the central and structured management of all active contracts withi…

A procurement policy is a formal set of rules and guidelines that determines how an organisation pur…

A procurement strategy is a deliberate plan for how an organisation sources goods and services to ge…

Supplier evaluation is the structured assessment of a supplier against agreed performance criteria s…

The contract lifecycle describes the complete journey of a contract from the initial identification…

Contract compliance is the process of verifying that both parties to a contract actually deliver wha…

Renegotiation is the process of reopening an existing contract with a supplier to revise terms, pric…

Negotiation strategy is the prepared approach an organisation takes into contract discussions with a…

A procurement threshold is a predefined spending limit that determines the level of approval, docume…

A procurement audit is a systematic review of your purchasing process, from supplier selection and c…

Supplier segmentation is the practice of categorising your suppliers based on two factors: how much…

A contract register is a central overview of all active contracts in your organisation, recording es…

Due diligence is the careful investigation you conduct before entering into a contract with a suppli…

A digital signature is an electronic method for verifying the identity of the signer and the integri…

Tendering is a structured procurement process in which a contracting authority invites multiple supp…

Contract automation is the use of software to replace manual steps in the contract process with auto…

Contract risk management is the systematic process of identifying, assessing, and mitigating risks t…

Version control in contract management is the practice of systematically tracking every revision of…

Contract archiving is the systematic storage, organisation, and retention of contracts and related d…

Contract transfer (also known as novation or assignment of contract) is the transfer of all rights a…