5 Essential Steps For Optimal Contract Execution In 2025

Content

• What is contract execution?
• What’s the difference between an executed and an executory contract?
• Why does contract execution matter?
• What does the contract execution process entail?
• How do I effectively execute a contract?
• Conclusion

What is contract execution?

Contract execution involves all parties signing and implementing the legal agreement. It is a vital stage in contract lifecycle management, during which the contract and relationship become effective. The signature indicates all the parties understand and consent to the contractual agreement. 

In addition to being signed, the contract must include all necessary components, including an offer, acceptance, consideration, and consent. After execution, all the terms and conditions laid out in the contract are legally enforceable, and parties must uphold them to avoid a breach. For instance, to successfully execute a sales agreement, the buyer and the seller must sign it, provide the agreed-upon payment, and deliver the goods or services.

What’s the difference between an executed and an executory contract?

In an executed contract, all parties have performed their duties. An executed contract is deemed closed, and no further action is necessary once the parties carry out all the contractual obligations. For example, when you purchase a product from a store and pay for it, you and the store have fulfilled your obligations, making it an executed contract.

On the other hand, an executory contract is a contract where one or more parties have yet to fulfill their obligations. It means there are ongoing activities, and parties have yet to complete the contractual terms. An executory contract remains open and ongoing until all parties entirely perform their duties.  For instance, when you sign a lease agreement with a landlord, the contract is considered executory until the end of the lease term and all rent payments.

The main difference between executed and executory contracts lies in their completion status. Executed contracts are complete, whereas executory contracts are still in process. Executed contracts are closed and do not require further actions, whereas executory contracts involve ongoing obligations until all parties have fulfilled their duties.

Why does contract execution matter?

A well-executed contract provides legal protection for all parties involved, outlining rights, obligations, and remedies in case of disputes. By signing, each party agrees to perform their duties without fail. 

Contract execution helps prevent misunderstandings and misinterpretations by clearly defining the terms of the agreement and getting parties to consent to it. Thus, parties can ensure its enforceability in a court of law.  It makes resolving conflicts easier and holds people accountable for their decisions.

Contracts help mitigate risks by outlining responsibilities, timelines, and deliverables, reducing the likelihood of unexpected issues arising. Signing contractual agreements demonstrates that all parties are on the same page regarding the future of the contractual relationship.

What does the contract execution process entail?

All of the earlier phases of the contract lifecycle need to be effective for the execution of the contractual agreement to go smoothly. The terms of the contract must be precise, accurate, and fair for any party—customers, suppliers, or partners—to sign it.  

Therefore, the contract execution process typically begins with drafting the contract. It involves clearly outlining the rights and responsibilities of each party, as well as any conditions or limitations. Next, the involved parties negotiate the contract. 

Negotiation: During this stage, the parties involved discuss the contractual terms and resolve any disagreements or discrepancies. Negotiation is crucial in ensuring all parties agree to continue with the contract. It ensures everyone is in consensus regarding everything stated in the legal document.

Review: Relevant stakeholders review and approve the terms, conditions, and responsibilities after they are all written down. For example, legal, sales, or finance teams may need to review the document to ensure compliance and accuracy. Once all parties are satisfied with the contract, it is approved and ready for execution.

Execution: The execution of the contract involves the parties signing the contract to indicate their commitment to the obligations. All forms of signatures, whether wet, digital, or electronic, are legally acceptable methods of contract execution.

Post-signature: Following the execution, all parties must carry out the obligations outlined in the contract. They must adhere to the terms to ensure a successful business relationship. Therefore, businesses must continuously monitor the contract lifecycle to ensure parties adhere to the terms.

How do I effectively execute a contract?

The validity and enforceability of a contract greatly depend on the execution process. When onboarding clients, vendors, or employees, you need the signing part to go down as smoothly as possible to start reaping the benefits of the contractual relationship. Here are some tips on effectively executing a contract:

1. Expedite review process

The first step to executing a contract is to speed up the review process. Businesses must set clear timelines for review and approval to prevent unnecessary delays in the contract lifecycle. They can assign responsibilities to specific team members to carry out the processes without hiccups. By establishing a structured review process, they can avoid hurdles and ensure prompt contract execution.

Solution:  Dock 365 contract management software provides tools and technology to speed up the review process. Businesses can delegate review and approval to specific stakeholders to maintain accountability throughout the process. Instead of manually going through hundreds of documents, Dock 365 allows users to leverage AI contract management to extract, summarize, and compare contracts. It fast-tracks the process considerably and reduces the possibility of human error.

2. Legal overview

Businesses must conduct a thorough legal review before signing the contract. If the contractual agreement fails to comply with legal, organizational, and industrial standards, enforcing them can be an uphill battle. They must ensure the terms and conditions are clear, precise, and legally binding. Legal supervision can mitigate the risk of disputes and guarantee a contract’s legal validity. However, legal departments cannot always oversee the entire contract lifecycle, especially as portfolios grow.

Solution: Organizations can guarantee the competence of contracts by standardizing the drafting process across the board. Dock 365 provides pre-written templates for diverse purposes, including SOWs, SLAs, NDAs, employment agreements, etc. They can also include relevant terms and conditions from the clause library. Thus, businesses can create legally valid and qualified contracts without constant legal intervention.

3. Painless signing process

Make the contract signing process as simple as possible to accelerate execution. Wet signatures and document scanning can be time-consuming for contracting parties. Moreover, it’s harder to keep track of contract status when processes take place via email or shared files. It can cause delays, miscommunication, and disputes in the contract lifecycle.

Solution: Businesses can utilize electronic signature solutions to ensure a painless signing process. Electronic signatures are legally binding and can streamline the signing process, allowing all parties to sign the contract quickly and efficiently. With little effort, they can sign a contract anytime, from any device. Electronic signature solutions like DocuSign, Adobe Sign, and Sertifi enable organizations to scale execution.

4. Establish signatories

Identifying and establishing the signatories of a contract is crucial to its execution. Businesses must clearly define who has the authority to sign the contractual agreement to ensure signatories know their responsibilities. Establishing signatories upfront can prevent confusion and expedite the signing process. Organizations can also implement sequential or parallel signing orders to ensure that all relevant stakeholders are involved.

Solution: Electronic signature solutions allow businesses to assign signatories for a particular contract. Users must add their name and email address, and the platform will send the relevant documents to signatories for signing. It also enables businesses to set signing orders for all their contracts. They can add a list of signatories and sequence them to streamline the execution process.

5. Set up workflows

When there are multiple stakeholders or documents to review, approve, and sign, it can be demanding to navigate the process. It can be time-consuming to route contracts through signatories and can set back processes. Moreover, manual contract execution is prone to errors, leading to costly disputes and delays.

Solution: Automated workflows can significantly reduce the time it takes to move a contract from negotiation to execution. They can ensure that all steps in the contract execution process are followed accurately and consistently, reducing the risk of mistakes. All stakeholders have real-time visibility into the status of a contract, including upcoming deadlines and pending approvals. 

Conclusion

Execution is a significant part of the contract management process. While electronic signature solutions can streamline signing, relying on multiple platforms for the contract lifecycle can reduce efficiency. Dock 365 addresses this inconvenience by automating the entire contract lifecycle on a single platform.

It enables businesses to draft, negotiate, review, and sign contracts without switching systems. Dock 365 integrates with electronic signature solutions like DocuSign, Adobe Sign, and Sertifi. It comes with the benefits of AI review, automated workflows, reminders, and bulk actions. 

Schedule a live demo today to learn more about Dock 365 contract management software.