How to transition a Contract from Active to Inactive

This article explains when and how a contract moves from Active to Inactive, what this status means for the business, and what actions remain available after inactivation.

🗺️ Overview

A contract becomes Inactive when it is no longer in effect but still needs to be retained for reference, compliance, or future actions. This can happen either manually, when a responsible user decides the contract should no longer be active, or automatically, when the contract reaches the end of its lifecycle based on dates and renewal rules.

Moving a contract to Inactive helps organizations clearly distinguish between contracts that are currently enforceable and those that have ended, without losing important contractual information.

🧑‍🦱 Who Can Use This

Only the following roles can transition a contract from Active to Inactive:

• CLM Power User

Other users will not see the Deactivate option at all.

✍️ Manual Deactivation

A CLM Power User can manually deactivate an Active contract.

• Once confirmed, the contract status changes to Inactive immediately.

• The Start Date and End Date remain unchanged to preserve the contract’s legal history.

• An email notification is sent to inform CLM Power User and Editors/Viewers that the contract has been inactivated.

  

🧑‍💻 Automatic Deactivation

A contract is automatically set to Inactive by the system when all of the following conditions are met:

• The contract reaches End Date + 1 day, and

• One of the following applies:

  • The contract does not have a renewal clause, or

  • The contract has a renewal clause, but all allowed renewals have already been used.

  • The contract has a manual renewal clause, but renewal was not triggered manually.

After automatic deactivation occurs:

• The status changes to Inactive without user action.

• The System is recorded as the actor of the change.

• Contract dates remain preserved.

• An email notification is sent to inform CLM Power User and Editors/Viewers that the contract has been inactivated.

✅ What Happens After Deactivation

Once a contract is Inactive:

• Renewal is no longer available.

• The contract remains visible in View mode, with limited actions based on user role.

Available actions:

• Edit – available to CLM Power Users, and Editors

• Archive – available to CLM Power Users

• Reactivate – available to CLM Power Users

• Change Owner – available to CLM Power Users

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Best Practices

💡 Tips for Effective Use:

• Avoid deactivating a contract while someone is actively editing it to prevent lost updates or confusion.

• Use manual deactivation when business decisions change before the contract naturally ends.

• Rely on automatic deactivation to consistently manage contracts that reach their natural expiration.

• Review inactive contracts regularly to decide whether they should be reactivated, archived, or kept for reference.