Navigating common CLM terms: a comprehensive glossary 

Getting into the complex world of Contract Lifecycle Management (CLM) can almost feel like contacting an alien race – having to wrangle jargon and specific terms while protecting your own interests feels like weaving a spaceship through an asteroid belt. The process of decoding legal terminology can be daunting, but it doesn’t have to be. 

In this article, we’ll demystify common CLM terms, providing clear and concise explanations of key concepts that you’ll see often throughout your CLM journey. 

Key contract management terms you should know

AI-enhanced CLM

AI-enhanced CLM refers to the use of computer algorithms to automate and enhance various aspects of the contract lifecycle. AI can be applied to tasks such as contract analysis (extracting key data, identifying risks), workflow automation (routing contracts for approvals), and contract intelligence (predicting renewals, identifying potential bottlenecks). 

Contract data

Contract data refers to the structured, extract information contained within legal agreements, such as terms, dates, obligations, parties, values, and clauses used for business management, risk mitigation, and compliance. This term is distinct from a technical “data contract” which is an agreement about data exchange.

There are four distinct types of contract data within the CLM ecosystem, which are as follows:

• Contract content data: This refers to the key details within a contract, like the parties involved, contract duration and terms, and critical dates. 
• Contract process data: This tracks the contract’s progress through its lifecycle, detailing its current stage and the associated actions taken. 
• Contract performance data: This involves analyzing how well contracts are meeting their stated obligations and commitments. 
• Decision support data: This combines various contract insights and metrics to inform future business strategies and organizational changes. 

Contract repository

A contract repository is a centralized, secure storage location for all contract-related documents and data, serving as a “single source of truth” that enables easy access, version control, and searchability.  A well-maintained repository ensures that authorized users can quickly locate and retrieve the most up-to-date contract versions, supporting efficient contract management and reducing the risk of lost or misplaced documents.

Data-first CLM

Data-first CLM refers to a a modern approach that prioritizes contract data as the central driver of the entire contract lifecycle, shifting the focus from the contract document itself to the underlying information it contains. This “data first, document second” approach focuses on capturing, exposing, and synchronizing contract data with other enterprise systems, creating a real-time system of record where every data point is programmatically accessible.  

Key features of data-first CLM include its emphasis on real-time data accessibility, robust extraction from various sources, and a user-friendly, no-code interface. Ultimately, this data-centric approach unlocks the full potential of contracts, driving efficiency, reducing risk, and generating greater business value – and if you’re interested in learning more, check out our full article on data-first contract lifecycle management here. 

Clause library

A clause library is a centralized repository of pre-approved, standardized contract clauses, serving as a collection of legal building blocks that can be easily inserted into contracts, ensuring consistency, reducing risk, and speeding up the contract drafting process. These clauses cover a wide range of common contractual provisions, such as payment terms, confidentiality agreements, liability limitations, and termination clauses. 

Electronic signature (e-signature)

E-signature is a legally-binding, digital equivalent of a handwritten signature, encompassing various methods of electronically indicating agreement, from typing a name to using digital certificates. 

Obligations

Obligations refer to the specific duties or responsibilities that each party agrees to perform, including anything from delivering goods or services to making payments or adhering to specific confidentiality requirements. Obligations are the core of a contract, defining what each party is legally bound to do. (Related: “Why missed obligations are contracts’ silent revenue killers“)

Post-signature

The term “post-signature” encompasses the stages of the contract lifecycle that occur after the agreement is signed, such as contract storage, performance monitoring, obligation management, renewal tracking, and eventual contract closeout or termination that occur after a contract has been signed, where the contract is actively managed and its terms are fulfilled.  Like the term “pre-signature,” “post-signature” isn’t a strict legal term, but a practical descriptor of the contract lifecycle stage following execution.

Pre-signature

The term “pre-signature” refers to the activities and processes that occur before a contract is formally signed.  This includes drafting, negotiation, redlining, internal approvals, and finalizing the contract terms. Not a strict legal term, “pre-signature” is commonly used in CLM to describe the preparatory phase where all the groundwork is laid before the legally binding act of signing takes place. 

Redlining

In a contract negotiation context, “redlining” refers to the process of marking up a contract document with proposed changes, additions, or deletions. This process provides a clear and trackable record of proposed changes, making it easier for parties to understand each other’s positions and reach a mutually agreeable final contract. The term originates from traditional contract editing methods, where draft contracts would be amended with red pen ink.

Risk management

Risk management refers to the process of identifying, assessing, and mitigating potential risks associated with contracts, such as legal risks (e.g., non-compliance, ambiguous clauses), financial risks (e.g., payment defaults, unexpected costs), and operational risks (e.g., supplier disruptions, performance failures).

Scalability

Scalability refers to the CLM software’s ability to handle increasing volumes of contracts, users, and data without compromising performance or functionality. A scalable CLM solution can adapt to the growing needs of an organization as it expands, ensuring that contract management remains efficient and effective even with a significant increase in contract volume and complexity. Often involves cloud-based infrastructure, flexible architecture, and the ability to easily add users and integrations.

“White box” AI

“White box” AI refers to models that provide transparency into their decision-making processes. Unlike “black box” AI, where the reasoning behind an output is opaque, white box AI clearly shows users how it arrived at a particular conclusion. This is crucial for building trust and confidence in AI-driven insights, particularly in legal and contracting environments. 

This transparency is achieved by directly linking AI-generated responses to their corresponding source within the agreement. Users can trace the model’s reasoning back to the specific text or data that informed the output, eliminating guesswork, increasing trust, and ensuring accountability.

Wet signature

A wet signature is a handwritten signature on a physical document. “Wet” refers to the ink of the physical signature. 

Conclusion

While CLM and all its associated jargon may sound like another language at times, the right CLM partner will be able to fully inform you and serve as a guide to staying ahead in an increasingly complicated legal universe. As a global leader in the CLM space with a 99.6% implementation success rate, Agiloft is proud to the guiding star of organizations big and small, worldwide.

Now that you’ve covered the basic contract management terms, learn more about terminology specific to ESG initiatives here.