Like many professionals who are not necessarily lawyers, you may not be familiar with the clause library definition. In this article, we’ll explain what it is, and why it can be a huge asset to your business.
Clause library definition
A clause library (often digital) contains all the clauses that can be incorporated into any legal document issued by your company. It functions as a huge database in which you can search for the elements you need to create a contract or amendment.
It’s an essential tool – and not just for lawyers! – since it enables all the paragraphs making up a contract to be listed and classified in a single place. This simplifies drafting and saves precious time for all concerned.
Advantages of having a clause library
Setting up a legal clausier is obviously an advantage for lawyers. However, other departments, such as sales, purchasing, finance and human resources, also benefit, for three main reasons:
Pre-registered clause templates
A clause library facilitates the creation, updating, and renewal of a contract. Like a predefined contract template, the system’s preregistered clause templates simplify document drafting and even automate the process.
To build a contract from A to Z, simply select the paragraphs you need from the database.
The contract life cycle is simplified right from the start, helping you save time.
These clauses can also be classified, so you can quickly identify those that pose a risk to your contracts. When you create or edit your clause templates in your clause library, you assign them a risk level, ensuring that nothing gets overlooked.
Of course, this database needs to be classified according to the types of contracts and clauses your company needs to draft. Not organizing your database would be like putting all your documents in the same box, without any order, binders, or dividers.
Ensures Contractual Compliance
Thanks to a clause library, you can also avoid errors by ensuring the compliance of your contracts. As a lawyer, you can easily define which conditions comply with your company’s regulatory and internal policies. By updating them automatically, you simplify the process of bringing each of your contracts up to standard. This way, you can ensure that they comply with your policy at all times.
Maximizes Legal Expertise
The use of a shared clause library then enables all parties in the company to access the company’s contractual assets and be sure of their compliance. As a result, there’s no room for error: the system is centralized in one place, and everyone has access to the same information, updated in real time.
Example of clauses of a clause library
A well-structured clause library should contain a wide range of contractual clauses adapted to the company’s various contracts. Here are some of the most common types of clauses to be found:
General clauses
These clauses are present in the majority of contracts and define the general obligations of the parties. They include :
- Confidentiality clauses, which protect sensitive information exchanged between the parties.
- Force majeure clauses, which specify the conditions under which an external event can suspend or cancel a contract.
- Termination clauses, detailing how the contract is to be terminated.
Specific clauses
Depending on the field of activity, some contracts require special clauses:
- Employment law: non-competition clauses, mobility clauses.
- Commercial law: intellectual property clauses, exclusivity clauses.
- Business law: warranty clauses, liability limitation clauses.
These clauses make it possible to adapt contracts to legal requirements and company needs.
Best Practices for Managing a Clause Library
Setting up an effective clause library requires following certain best practices to ensure contract consistency and compliance.
Classify clauses by category
It is essential to organize contractual clauses according to their nature and use. This can be done according to :
- Type of contract (employment contracts, commercial contracts, service contracts, etc.).
- The level of risk associated with each clause.
- Sector-specific regulatory requirements.
Regularly update the clausier
Laws and regulations are constantly evolving. An effective legal clausier needs to be regularly updated to ensure contract compliance. This task can be facilitated by automated management tools integrated into contract drafting software.
Use standardized model clauses
The integration of pre-validated contractual clause templates ensures contractual consistency and security. These models ensure harmonized contractual practices throughout the company, and limit legal risks.
Adopt a CLM with an Integrated Clause Library
Using a clause library to facilitate the drafting of contracts within your company is beneficial. But using a contract management solution with an integrated clause library is even better. Thanks to the multiple functionalities of contract management software, you can streamline the entire contract life cycle.
đź’ˇ Did you know? According to PwC, 12% of a company’s annual costs are spent on the manual part of contract management.
The digital contract library
Among the tools integrated into these solutions, your first ally will be the digital contract library. This online tool centralizes and manages all of a company’s contracts. It functions like a digital library, containing all documents issued, received and signed.
Validation workflows
It works in perfect osmosis with a second feature inherent to CLMs, called validation workflows. These facilitate the internal process of creating and circulating contracts.
They improve collaboration between all teams by digitizing internal and external approvals. The various parties involved in a contract can validate, modify or reject it at any time. Others are instantly notified.
The electronic signature
All that’s missing at this stage is an electronic signature to make your contract travel even simpler.
Contract management software often works interoperably with electronic signature solutions. This is the case at DiliTrust, where we collaborate with electronic signature partners such as Docusign, Hellosign, Universign and many others, offering users the possibility of signing contracts, amendments and documents remotely, at any time and, of course, in total security.
How artificial intelligence facilitates the use of a legal clausier
Some CLMs, such as DiliTrust’s, are equipped with artificial intelligence (AI). In particular, AI assists humans by taking over tedious and time-consuming tasks, thereby making the setup and management of a clause library much more efficient.
For instance, AI-powered software, like DiliTrust’s CLM, recognizes the clauses in your contracts and automatically integrates them into your clause library. As a result, there is no need to search for and manually input them—ultimately saving you valuable time for high-value tasks.
Moreover, new clauses are automatically detected and added, while existing ones can be modified effortlessly, ensuring that your clause library remains up to date.
Finally, artificial intelligence plays a crucial role in ensuring contract compliance and, by extension, enhancing company security. By autonomously extracting information from your contracts, AI proactively notifies you in real-time when a clause needs updating or when a contract is nearing expiration.
Want to know more? Discover the DiliTrust CLM today.
