Derivative Fundamentals

Contract Lifecycle

Learning Outcome

5

Evaluate renewal, expiry, and termination. 

4

Understand monitoring and settlement processes.

3

Explain negotiation, approval, and execution.

2

Identify the key stages of the contract lifecycle.

1

Understand the Contract Lifecycle and its importance.

Contract Lifecycle

Contract Lifecycle is the complete process through which a contract passes from its creation to its final completion or termination. It includes stages such as contract creation, negotiation, approval, execution, monitoring, settlement, and closure, ensuring that all terms and obligations between parties are properly managed and fulfilled.

 

 

 

Real-Life Example

The Construction Deal
A real estate developer drafts a contract with a builder, negotiates terms like cost and timeline, then signs it to begin work. The builder constructs while the developer pays in milestones, and if extra features like parking are added, the contract is amended. Once the project is completed and payments are settled, the contract expires and all documents are archived for compliance.

Stages of Contract Lifecycle

Importance of the Contract Lifecycle

Summary

5

It ends through renewal, expiry, or termination.

4

Monitoring ensures obligations are fulfilled.

3

Approval and execution make it legally binding.

2

It starts with contract creation and negotiation.

1

Contract Lifecycle is the journey from creation to closure.

Quiz

What is the first stage of the contract lifecycle?

A. Approval

B. Contract Creation

C. Settlement

D. Execution

Quiz-Answer

What is the first stage of the contract lifecycle?

A. Approval

B. Contract Creation

C. Settlement

D. Execution