Applying artificial intelligence to contract management

Contracts are difficult (or rather impossible) to sort. They are everywhere, distributed across many repositories, scattered across multiple locations. The inaccessibility of contracts makes the task of managing them cumbersome, leading to a risk of losing out important business opportunities that are buried in these resources.

The manual handling of these contracts become even more difficult when it comes to deal with the amendments, terminations and (the most important) renewals of the contracts. That’s how the need of digitizing contract management came into the picture with various contract lifecycle management (CLM) solutions coming up.

From contract management to contract intelligence

The next step was unlocking secrets from contracts. Combining artificial intelligence (AI) with the contract management system has revolutionized business opportunities by redefining the real potential of these contracts that were buried within millions of files and folders from years.

Artificial Intelligence can convert unstructured contract documents into structured enterprise data. Applying AI in contract management can help the enterprise in identifying business risks and opportunities; AI understands the contract language and the meaning of clauses, it turns the contract management from a simple document management repository to a live, strategy-making machine.

Applications of AI in contract management

Machine Learning and AI help identification & analysis of clauses and other data. It can let companies review contracts more quickly, organize large scale of contract data more easily, can help in contract negotiations, and increase the volume of contracts it is able to negotiate and execute.

Let’s see some applications of artificial intelligence in contract management.

  • Contract classification: Sort each contract by type based on the content of the clause. E.g. MSA, SOW, lease, Independent contractor agreement etc.
  • Clause classification: Scan through the document and understand the significance of each paragraph. Based on the content, it classifies the clauses
  • Mark out important part of the clause: Highlight the important information covered in the clause
  • Learn about the new clauses: If the program uses enough documents with any new clauses, AI will learn all about it and secure it its clause library enhance clause classification with time
  • Supervised learning and retraining: Reviewer can change the wrongly classified clauses and the code learns to recognize in future, based on what the reviewer programmed it for
  • Similar Documents classification: Identify and classify similar types of documents

Also Read: 6 Things to Check Before Contract Management Software Implementation 

How does it work?

To understand the intricacies of artificial intelligence in contracts, let’s discuss a couple of scenarios in depth –

Automatically organize, classify, and extract important piece of information

Automated contract abstraction and migration is another technology-enabled service that automates the entire process of abstracting information from all your contracts. AI algorithms powered by natural language processing (NLP) based machine learning perform abstraction and migration with unprecedented speed and accuracy and creates an index of all the key terms, provisions, and obligations. Thus, you can automatically extract important information from a contract such as names, organization and vendor information, the contract signature date, renewal dates and more — the hundreds or thousands of contracts you have can be auto-tagged with the right companies, right data, right deadlines and automatic renewal alerts can be set. This will help you transform your business completely.

With pattern recognition algorithms, AI can identify areas for improvement

With hundreds and thousands of legal documents being uploaded to a contract management system, it is very tedious to tag each clause in the documents manually for further processing. However, machine learning algorithms can help to identify name of the clause on the basis of its contents. Now, with this trained model, we can upload document in a contract management software and it auto tags documents. It goes wrong at some points. Therefore, we do consider that. If that algorithm predicts clause name wrongly, all you can do is give it a correct label for given text and it should adjust itself after a few iterations of the clause and it does not repeat the same mistake again.

Also Read: Top 3 Things to See in Your Contract Management Implementation Partner


Artificial intelligence is becoming very big deal in business. Impact of such artificially intelligent systems on enterprises is huge when it comes to staying a step ahead of peers and enriching the way they serve their customers. And the underlying platform for AI is data and the cloud!

As a trusted Microsoft Partner, CloudMoyo understands AI, data and the cloud, and how to build integrated intelligence into applications using the most advanced cloud technologies. Wherever you are in your AI journey, we can help you modernize the way you do business.

Get started with Artificial Intelligence with a custom workshop for your team today!