From the course: Supply Chain Foundations: Strategic Contract Management
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Defining the elements of a contract
From the course: Supply Chain Foundations: Strategic Contract Management
Defining the elements of a contract
- [Instructor] A good contract should be as simple as possible and easy to understand, but we realize that most contracts are pretty complex and filled with legal terms. So before you initiate a contract, it's a good idea to recognize the different terms you'll find and what they mean. Of course, this will vary with the type of contract used, the purpose of the contract, and the practices of your company. But in general, there are nine common elements to a typical business contract. Most contracts begin with a list of definitions. This helps both parties to ensure there are no misunderstandings, so it's important to write clear and concise definitions. The second section of the contract will specify the scope, which tells both parties what's included in the agreement. For example, a contract may be to purchase one software package and have it installed in one factory. Next are the detailed specifications. For products, they will specify the production methods and quality levels. For a…
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