The stages of contract lifecycle management help businesses manage contracts faster, with less risk and more control. From request to archival, each stage ensures clarity, compliance, and better outcomes. This guide outlines each stage to help you manage contracts with greater clarity and efficiency. 

Stage 1: Contract Request 

The contract lifecycle management process starts when a team member send a formal request to create a contract. This includes basic information like the contract type, involved parties, value, scope of work, and deadlines. It makes sure that the process starts with clarity and intent. 

• Prevents miscommunication by collecting all essential inputs at the start 

• Assists to prioritize requests based on urgency or complexity 

• Helps involve the right team from the very beginning of the process. 

A procurement manager submits a request to create a vendor agreement for a new software subscription. The form includes the vendor’s name, contract duration, and expected cost. 

Stage 2: Contract Authoring 

After the request is approved, the legal or contract team begins drafting the agreement. They use approved templates and standard language, adding any custom terms from the initial request. 

• Saves time by using templates and reusable language 

• Ensures alignment with company policies and deal terms 

• Promotes uniformity across contracts, reducing legal exposure and minimizing mistakes. 

The legal team prepares a draft using the company’s master service agreement template, adding customized deliverables and payment terms. 

Stage 3: Contract Internal Review 

Before the contract draft is shared with the external party, it undergoes a thorough internal contract review. Key stakeholders typically from legal, finance, and compliance teams examine the contract to ensure accuracy, consistency, and alignment with internal policies. This step helps identify and resolve any potential risks, errors, or gaps early.  

• Spots potential issues early, before the contract is shared with the other party. 

• Ensures compliance with internal controls and financial limits 

• Brings multiple teams into alignment before negotiation begins 

 
The finance department checks the billing structure, and legal reviews the liability clauses before giving the green light to send the draft to the vendor. 

Stage 4: Contract Negotiation 

At this stage, the draft contract is sent to the external party for their input and feedback. During this stage, the draft contract is sent to the external party for their review and input. Both sides exchange feedback, suggest edits, and propose redlines to reach mutually acceptable terms. Contract negotiation process typically focus on key elements such as risk allocation, pricing, timelines, deliverables, and any custom terms. The goal is to protect each party’s interests while finalizing terms that support a successful working relationship. 

• Helps reach mutually agreeable terms without compromising business interests 

• Builds stronger partnerships by addressing each side’s concerns 

• Protects the company by negotiating favourable terms 

The vendor requests a 50% upfront payment. The company negotiates a milestone-based payment structure and adjusts the service start date accordingly. 

Recommended Read: Effective Contract Negotiation Strategies 

Stage 5: Contract Approval 

After both parties agree on the final contract terms, internal approval is required before execution. This step ensures that key decision-makers such as department heads, finance, legal, or senior leadership formally review and sign off on the agreement. A good contract approval process help verify that the contract aligns with company policies, budgets, and risk thresholds before it becomes legally binding. 

• Ensures final terms are thoroughly reviewed and endorsed 

• Confirms that the deal aligns with business priorities 

• Reduces risk of unauthorized or non-compliant agreements 

The Head of Procurement and the CFO approve the finalized contract after confirming the pricing and budget impact. 

Stage 6: Contract Execution 

After internal approvals are complete, the contract moves to execution, where both parties officially sign the agreement. This can be done electronically using e-signature tools or through traditional manual signatures. A fully executed contract becomes legally binding and is stored in a central repository for easy access, tracking, and future reference. 

• Legally binds both parties to agreed terms 

• Serves as the official start of the business relationship 

• Enables downstream teams (e.g., operations, finance) to begin work 

Both parties sign the agreement through electronic signature. The signed copy is uploaded to the company’s contract repository and shared with the operations team. 

Stage 7: Contract Obligation Management 

Once the contract is active, relevant teams are responsible for tracking and fulfilling all agreed-upon obligations. This includes managing deliverables, payments, timelines, performance metrics, and service levels. Proper contract obligation management ensures that both parties meet their responsibilities, helps avoid missed deadlines or penalties, and supports consistent contract performance throughout its lifecycle. 

• Makes sure all terms are fulfilled on time and within scope 

• Helps avoid missed deadlines, penalties, or poor service 

• Strengthens accountability across teams 

The project team sets reminders for monthly service reviews, while finance processes invoices based on the agreed timeline. 

Stage 8: Contract Amendment or Renewal 

Over time, business needs may change, requiring updates to the existing contract. This stage covers any formal modifications such as adding new terms, adjusting scope, or extending the contract duration. Contract amendments are documented to ensure legal clarity. 

• Maintains continuity of service or supply 

• Allows for performance-based adjustments or improvements 

• Reduces legal risks from expired or outdated terms 

After six months, the vendor offers an extra service. The company updates the contract to include the new service and changes the pricing and scope to match. 

Stage 9: Contract Expiry or Archival 

When a contract successfully reaches its end or is concluded early, it enters the closeout phase. Final deliverables or payments are confirmed to ensure everything has been completed as agreed. The contract is then safely archived for easy access, future reference, and compliance. A well-managed closeout sets the stage for stronger future partnerships and clean recordkeeping.