Contract execution best practices

Understanding contract execution

Contract execution is a critical stage in the contract management process, where an agreement becomes legally binding once it is signed by the necessary parties involved. A fully executed contract signifies that all parties involved have reviewed, agreed upon, and signed the finalised agreement, solidifying their contractual relationship and legal obligations.

Whether dealing with a legally binding lease agreement, a business deal, or high-volume agreements, ensuring a secure contract execution process is essential to avoid unnecessary delays and costly disputes. This guide breaks down the execution process, key challenges, and how to optimise contract execution using digital solutions, including emerging technologies such as AI.

The contract execution stage involves several steps to ensure an enforceable agreement as part of the contract lifecycle:

1. Drafting and reviewing the contract

Before reaching the final agreement, the contract negotiation process allows relevant parties to discuss and refine contract terms. A thorough contract review process helps identify terms of the executory contract for example and prevent unenforceable contracts.

2. Approval process

To properly execute a contract, approval from authorised officers or stakeholders is necessary. Without this, even a written agreement may lack legal authority, rendering it invalid.

3. Signing the contract

Contracts can be signed traditionally with ink or through online agreements using click-to-accept methods and effective signature methods like electronic signatures. Ensuring that the person signing has the proper authority is crucial.

4. Establishing the execution date

The execution date is when the contract is officially executed. However, the effective date may differ if the contract specifies a future start date for obligations from the necessary parties to begin.

5. Storing and managing executed contracts

After contracts are signed, they should be stored securely to enable easy access for compliance, auditing, and potential disputes. An effective contract management process can prevent lost value due to misplacement or lack of oversight.

What are the rules for executing contracts for different types of parties?

The requirements of an executed contract may vary depending on the types of parties entering the agreement.

Individuals executing contracts

Generally contracts between individuals are relatively straightforward. These contracts typically only require the signatory to leave their signature on the document and state their name below their signature.

Contracts often also ask for the individual to have a witness to their signing of the contract and also require that the witness also sign their name and signature beside the signatory’s signature. The witness should not be a party of the contract.

Partnerships executing contracts

In Australia, partners must follow the requirements of the Partnership Act for the applicable state and territory. These Acts generally allow for one partner to sign on behalf of the partnership to execute contracts, however the Partnership Agreement may have some conditions as to which partner may sign contracts.

A partnership’s fully executed contract must include:

  • The partner’s signature
  • The partner’s name
  • The name of the partnership

It may also be useful to have the name and signature of a witness as they add an extra layer of security and surety that it was the signatory who signed the contract, but this is usually not a requirement.

Companies executing contracts

There are three methods through which a company can execute a contract:

  1. The primary method a company executes contracts is through its senior directors as according to the Corporations Act.
    1. two directors of the company;
    2. one director and one company secretary; or
    3. the sole director who is also the company secretary. This is for proprietary companies only.
  2. The second method is for an individual within the company with the express or implied permission and authority to sign on behalf of the company
  3. The third is where the company’s appointed attorney signs a contract to execute the agreement on behalf of the company.

Trusts executing contracts

A trustee may sign to execute a contract on behalf of the trust. The process and method will vary depending on whether the trustee is an individual or corporate trustee.

When the trustee signs the contract, the contract must state that the the signatory is executing the contract in its capacity as trustee, or​“as trustee for” (“ATF”) the trust.

If the trustee is a company then the requirements of Company signatories also apply.

Common challenges in contract execution

1. Delays in the execution process

Many contracts face costly delays due to inefficiencies in the contracting processes, such as slow approvals or miscommunication between business partners. These processes have traditionally been executed manually and are often time- and labour-intensive as they are not performed with the latest technology. The longer contracts take to get executed, the greater the backlog grows, which ultimately results in unrealised value.

2. Contract ambiguity and legal risks

A poorly drafted contract may contain vague contract terms, leading to disputes over interpretation. Proper legal review is necessary to ensure clarity.

3. Risk management and compliance

Failing to properly vet an agreement can expose a business to legal and financial risks. Ensuring compliance with industry standards and company policies is essential.

How to optimise contract execution

1. Automate the approval and signature process

Using a secure contract management platform with automated workflows can reduce time-consuming manual processes and ensure contracts are signed without bottlenecks.

2. Implement digital contract management tools

Digital tools can streamline the contract lifecycle, from drafting to final stage execution, by capturing the entire workflow and preventing costly disputes and ensuring compliance.

3. Use AI-powered contract review

AI solutions can help flag risky clauses, compare past agreements, and ensure all necessary contractual obligations are met before finalising an executory contract.

A well-executed contract is the foundation of a strong contractual relationship. By understanding the execution stage and leveraging modern tools, businesses can properly execute agreements, reduce delays, and maintain legally enforceable agreements.

Accelerate your contract lifecycle

Plexus Contract Management streamlines contract execution by automating workflows, ensuring compliance, and eliminating delays. With features like e-signature integration, approval process automation, and version control, Plexus enables relevant parties to efficiently execute contracts while maintaining a clear audit trail. By reducing manual effort and mitigating ambiguity, Plexus helps organisations achieve secure contract execution, minimise costly disputes, and optimise executed contracts for better risk management and compliance.


Plexus gives you everything you need to accelerate business productivity in one modular platform. Get contracts signed faster, streamline document workflows, collaborate in real-time, and integrate with the apps you already rely on.

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