Use Case | Management of Sales Contracts through Segmentation and Organization

Use Case: Management of Sales Contracts through Segmentation and Organization

General Description:
Managing sales contracts requires analyzing and organizing critical clauses such as deadlines, penalties, and legal conditions to ensure compliance with agreements and reduce legal risks. A model that segments, organizes, and utilizes semantic searches facilitates the consultation and comparison of contracts, optimizing management and assisting in audits, renegotiations, or tracking commitments. This approach is ideal for businesses in sectors like commerce, real estate, manufacturing, and services.

How It Works:

1. Upload Sales Contracts in PDF:
   • Users upload contracts related to goods, services, or tangible assets.
2. Automatic Segmentation by Categories:
   • The model automatically organizes contracts into key sections such as:
     • Deadlines: Delivery dates, payment terms, key milestones.
     • Penalties: Fines for breach of contract, delays, or delivery defects.
     • Legal Conditions: Jurisdiction, dispute resolution, party rights.
     • Additional Terms: Price adjustments, warranties, subcontracting.
3. Semantic Searches:
   • Users perform specific queries such as:
     • “Which contracts include penalties for delivery delays?”
     • “Identify clauses related to price adjustments due to inflation.”
     • “Legal conditions applicable in contracts with jurisdiction in Europe.”
4. Generation of Comparative Summaries:
   • The model generates summaries highlighting:
     • Contracts with the strictest or most favorable terms.
     • Key differences between similar contracts.
     • Recommendations for adjustments based on internal policies.
5. Storage in Vector Database:
   • Segmented contracts are stored for fast searches and future audits.

Practical Example:
Scenario:
A real estate company needs to analyze 50 sales contracts to ensure they meet their standards for payment terms and legal conditions.
Process with the Model:

1. Upload Documents:
   • The 50 contracts are uploaded in PDF format to the system.
2. Model Segmentation:
   • The system organizes the information into:
     • Deadlines: Specific dates for partial and full payments.
     • Penalties: Fines for breaches of delivery deadlines.
     • Legal Conditions: Dispute resolution clauses and applicable jurisdiction.
3. Semantic Search:
   • The team queries:
     • “Contracts with payment terms longer than 12 months.”
     • “Which contracts impose penalties higher than 5% for breaches?”
   • The system responds with:
     • Contract 1: 18-month term, 8% penalty for payment delays.
     • Contract 2: 10-month term, no penalties for delays.
4. Generation of Comparative Summaries:
   • The model generates a report that includes:
     • Contracts with strict or unusual conditions.
     • Critical dates related to payments and deliveries.
     • Recommendations for renegotiating unfavorable clauses.
5. Report Output:
   • The compliance team receives a consolidated analysis to prioritize critical contracts and ensure follow-up on established commitments.

Benefits of the Model in Sales Contract Management:

1. Clear and Precise Organization:
   • Automatically segments contracts into key categories such as deadlines, penalties, and legal conditions.
2. Contextual and Fast Searches:
   • Responds to queries based on meaning, providing specific real-time results.
3. Efficient Comparisons:
   • Allows the analysis and comparison of terms between similar contracts, facilitating strategic decisions.
4. Automated Report Generation:
   • Highlights critical clauses and recommendations for adjustments or renegotiations.
5. Centralized Storage:
   • Centralizes contract management, enabling quick and easy access for audits or future queries.

Additional Applications:

1. Contract Audits:
   • Verifies that contracts comply with internal policies and legal standards.
2. Renegotiations:
   • Identifies clauses requiring adjustments due to changes in regulations or market conditions.
3. Risk Management:
   • Detects unfavorable or inconsistent clauses that could cause conflicts.
4. International Legal Compliance:
   • Ensures contracts comply with the specific regulations of each jurisdiction.
5. Optimization of Sales Processes:
   • Standardizes key terms in future contracts to reduce risks and improve efficiency.

Practical Example:
Additional Scenario:
A manufacturing company needs to identify favorable terms in sales contracts with international suppliers.
Without the Model:

• Analysts manually review each contract, facing delays and the risk of missing important details.
  With the Model:
• The system automatically segments contracts and generates a report highlighting:
  • Deadlines: Contracts with consistent or extended delivery times.
  • Penalties: Fines applied for recurrent breaches by certain suppliers.
  • Legal Conditions: Contracts with unusual clauses for resolving international disputes.
  • Recommendations: Adjust penalty terms for critical suppliers and establish consistent standards in key jurisdictions.

Conclusion:
Automated management of sales contracts through segmentation, semantic searches, and summary generation transforms complex processes into agile and precise tasks. This model is ideal for companies seeking to improve compliance, reduce legal risks, and optimize relationships with clients and suppliers in complex contracts.