Lifecycle of a contract: Stages

Contracts seal business relationships and engine businesses. Contracts are so consequential that a lot happens before and after signing them. In this blog, we decode every stage in the lifecycle of a contract and tell you how Contract Lifecycle Management (CLM) software facilitates its successful completion.

The stages:

These are the seven broad stages in a contract's lifecycle:

  • 1. Initiation
  • 2. Authoring
  • 3. Negotiation
  • 4. Approval
  • 5. Signing
  • 6. Execution
  • 7. Renewal/ termination

Let's explore the stages.


Initiation or Request is the stage at which a contract embarks on its journey. Every contract originates from a request. This stage witnesses the parties express their willingness or interest to enter into a contract. They collect the basic information on each other to weigh their profit, obligations, and risks surrounding the proposed contract and manifest their requirements and goals. This stage helps parties know each other better and establish trust before signing the contract; if the parties accept, the cycle proceeds.

With manual management, at this stage, parties encounter bottlenecks like missed requests and an improper medium to store and analyse information. CLM software prevents these bottlenecks by providing them with a one-stop platform to access all contract requests and the received data in one place, making it easy to examine each proposal thoroughly.


Authoring is the phase after the acceptance when one party starts drafting the actual contract. It begins with gathering all the essential data required to author the paperwork, including the identity of parties, scope of work, critical dates, term of the contract, etc. The draft is made typically by the legal team of the drafting party. They author the contract by incorporating standard and specific contract clauses according to parties' needs.

Incorporating apt clauses while authoring different contracts is tiring and time-consuming for even experienced legal teams. With the expert-curated clause glossaries of CLM software, legal teams can choose relevant clauses and effortlessly draft legally sound contracts. It will help them spend time reviewing rather than authoring the contract.


Dr. Chester L. Karrass was right when he said, "In business as in life, you don't get what you deserve; you get what you negotiate." Negotiating with counterparties before finalising any contract is paramount in accomplishing the goals of the enterprise.

At the Negotiation stage, parties review, redline the clauses of the drafted contract, intending to manifest their interests and goals in it as much as possible.

So, this stage sees constant communication and collaboration between parties to ensure the contract is not one-sided and yet mutually watertight. It demands a safe and convenient forum to communicate and review, as numerous strategically confidential matters transact between parties. CLM software presents a sophisticated platform, allowing stakeholders to securely view, redline, comment, track changes and collaborate in real-time.


Once the parties agree upon the negotiation, the Approval stage unfurls. Parties prepare the final draft of the contract incorporating all the negotiated aspects and thoroughly review it. The reviewed draft then enters into a chain of command, ready for approval from every party's relevant stakeholders.

Manually manoeuvring documents through various departments delays approvals. CLM software hastens approvals and enhances their visibility, ensuring a transparent, trust-driven approval process.


Until the contract is signed, nothing is real. It is the sign that establishes parties' identity, binding them with the contractual obligations. Thus, its imperative for the signing phase to go seamlessly and transparently.

Automating it with CLM software allows parties to e-sign contracts and ensure the signature's authenticity and convenient signing.


Once the contract is signed, the parties set out to fulfil their obligations. The fulfilment of such obligations as per the terms and conditions of the contract is compliance. The core intent of executing contracts is to guarantee proper compliance.

Missing any compliance triggers legal repercussions, affecting enterprises' reputations and business relationships. That's why tracking every step of compliance is so crucial. But step-to-step tracking is burdensome with manual contract management, as it's practically impossible to monitor manually the countless contracts vested with legal teams. With CLM software, legal teams can have a panoramic view over all the contracts, retrieve them, track compliances at a finger's click, and enable stakeholders to access active contracts anytime, anywhere.

Renewal/ Termination

Once the contract's term comes to an end, it's either renewed or terminated. It depends upon the parties' satisfaction with the contract's execution. The contract terminates if left unrenewed, thereby ending its lifecycle. However, if parties decide to renew it, they revisit and revise a few provisions of the same contract and sign it, thereby prolonging its lifecycle.

Innovative CLM platforms like The Legal Capsule help enterprises smoothly carry out each of these steps. Need support with any of the steps? Book a free trial or request a demo with The Legal Capsule today.

Start a free trial today!

Ready to Simplify and Automate Your Contract Processes?