A contract is a legal agreement between a purchasing enterprise and a supplier, which dictates buying, payment and delivery terms over time. SAP Sourcing enables you to generate a contract from an RFx, auction, or master agreement.

Each contract is based on a contract document template, which consists of clauses and sections of standard legal terms. Clauses can contain variables that are automatically replaced with terms and other detailed information taken directly from a sourcing event such as an RFx or auction or from a specific SAP agreement. These features enable streamlined contract generation that saves time and eliminates repetitive tasks.

The contract document is a Microsoft Word file that is attached to the sourcing event from which it is created. After it is generated, a contract can be edited in Microsoft Word and used for negotiation with the supplier.

For information about master agreements, which enable you to analyze, audit, and measure specific buying activity against a contract's goals, see Master Agreements.