Utilizing Contract Hierarchy

When setting up a contract, you will need to select the appropriate Contract Type. ​

The contract type determines what the pricing terms apply to.

• Supplier Level - Terms apply to all items from a supplier.
• Commodity Level - Terms apply to all items with a specific commodity code.
• Catalog Level - Terms apply to all items within specific catalogs.
• Item Level - Terms apply to specific items.

It's important to note that each individual contract applies to only one supplier. However, you have the option to aggregate multiple contracts into a hierarchy. In this hierarchy, the terms of a parent contract apply to its children contracts, and each child contract can be associated with a different supplier.​

​A contract hierarchy is a set of related contracts that can share accumulated amounts and discounts. When you create a contract, you specify whether or not it belongs to a hierarchy.

A master agreement serves as the highest-level contract in a hierarchy, allowing for the organization of subagreements. It is designed to group together subagreements and provide a comprehensive overview of the contractual relationships within a business or organization. Subagreements can be associated with a master agreement as long as the master agreement has a contract status of Processed or Open. This hierarchical structure helps streamline and organize contractual processes, making it easier to manage and track various agreements within a larger framework.

Subagreement is a term used to describe a contract that is associated with a parent contract in a hierarchical structure. In this structure, the parent contract can be either a master agreement or another subagreement. Each subagreement can have only one parent, but it can have multiple children.

A parent contract must be of the same level or of a higher level than its child. For example, a supplier level contract can be a parent to any other contract, but an item level contract can be a parent to only another item level contract. The following table lists the possible parent-child relationships in a contract hierarchy:

A standalone agreement refers to a contract that exists independently, without being part of a larger hierarchy or framework. In other words, it is a separate and self-contained legal document. If you intend to incorporate a standalone agreement into a hierarchy or a larger contractual structure, you will need to convert it into either a master agreement or a subagreement before the contract request is approved. This ensures that the agreement aligns with the overall structure and requirements of the contract.

Although No Release Order Contracts do not require release orders, they can be used to track spend accumulation from subagreement Release Order contracts.​

​Example: We can create a global No Release order contract as a master agreement, then add regional Release Order contracts as subagreements. Regional spend can be tracked in each Release Order contract, and the global spend from all subagreements can be tracked in the master No Release order contract.