AI based Contract analytics to spot and mitigate contract

Contracts are essential to any type of business and they determine the obligations of both the parties entering into a business relationship. Most of the organizations use their internal legally vetted contract templates when signing up with the other party but in some cases there will be a need to agree to the other party paper which is also called as the Third party paper .

When an organization uses its own templates, they are sure what they have agreed to and what are the risks and obligations in the event of not honoring the terms of the contract. But when it comes to accepting third party paper you are not sure of the language used in the most important clauses of the contract and how much nonstandard language is used across the contract. This can potentially put any organization at reasonable risk if no mitigation management is followed to alleviate the risks.

Here are some of the key potential risks when accepting third party contracts

The clauses and terms are mostly slanted to the originating party and hence can cause a higher level of risk
Payment terms may not be favorable to you
The renewal terms could be set to auto renew mode in the event of not receiving any termination notice before certain period
Jurisdiction and arbitration terms could be favorable to the other party
Another area of concern across organizations is the presence of a reasonable volume of active legacy and third-party contracts which are scanned and stored in shared repositories and never reviewed unless there is a specific need. Added to this, there are still gaps in contract management even when organizations are rapidly adopting to using automated contract management software to draft, red line and author the contracts. The biggest gap is that most of the contract automation software do not have expertise in discovering and extracting key metadata from legacy or third-party contracts.

It is understood that unless these legacy and third party contracts are digitized and brought into a central repository there is no way one can know what is inside these contracts and if there are any potential risks with any of these contracts. Traditional contract management processes fail in terms of speed, time and resources required to get to the bottom of each executed contract
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t-and-mitigate-contract-risks/