Session 4: Electronic Contracts
63
Business Contracts for B2B
Andrew Goodchild, Charles Herring and Zoran Milosevic
Distributed System Technology Center (DSTC)
Level 7, GP South, The University of Queensland, QLD, 4072, AUSTRALIA
Email: [andrewg, herring, zoran]@dstc.edu.au
Web: http://www.dstc.edu.au
Abstract
This paper presents an approach for the
specification and implementation of business
contracts needed for Business-to-Business (B2B)
services. We first examine typical elements of
business contracts and their usage. This analysis
sets a foundation for 1) modeling contracts and 2)
developing a role-based architecture that supports
typical operations in the contract’s lifetime. We
explore how contracts can be encoded in XML and
present an approach for monitoring and enforcing
of contracts. This approach provides a flexible way
of modifying rules of enforcement, as trading
arrangements change. A real-world contract
example is used to illustrate the concepts described.
1. Introduction
Many enterprises are eager to take advantage of the
emerging "Internet Economy". Internet based
commerce offers more potential than just online
storefronts (a.k.a. Business-to-Customer (B2C)) and
auction sites (a.k.a. Customer-to-Customer (C2C)), it
also offers opportunities in Business-to-Business
(B2B) e-commerce. B2B covers the area of online
exchange of information between trading partners.
Some examples of B2B include:
•
Trading partner integration between enterprises,
forming supply and value chains and allowing
automated coordination of business operations
(e.g. order management, invoicing, shipping and
government procurement).
•
Business process integration. Integration of
commerce sites, Enterprise Resource Planning
systems and legacy systems.
• Business-to-business portals enabling formation
of trading communities, electronic catalog
management, content syndication, and post-sale
customer management. Example sites include
www.mySAP.com, www.I2I.com and
www.ariba.com.
A fundamental issue faced by many developers of
B2B systems is how to ensure that you can trust a
party that you are dealing with at arms length. The
primary mechanism for doing this is by setting up a
business contract and depending on the law to enforce
the terms of the contract. The aim of this paper is to
provide mechanisms to facilitate electronic business
contracting. This involves support for electronic
contract representation and also support for various
contract operations. Typically, these include contract
negotiation, validation, signing, tracking, monitoring
and enforcing contract terms and conditions
Section 2 starts this paper off by stating the
requirements for business contracts in the context of
B2B. Section 3 outlines a role-based architecture to
support typical contract operations. Section 4 explains
how XML can be used for the specification of
business contracts. Section 5 presents an approach of
using BizTalk technology to support the monitoring
of business contracts. Section 6 concludes the paper.
2. Business Contracts for B2B
A contract is a legally enforceable agreement in
which two or more parties commit to certain
obligations in return for certain rights [R89]. In a B2B
context this can range from a simple one-page
purchase order for the sale of goods, to an extremely
complex thousand-page document for a trade level
agreement between multinational businesses.
In general, most B2B scenarios can be generalized to
a 5-phase trading process, of which contract
formation is one phase [C93]:
• Pre-contractual phase: customers identify
products or services and possible sources of
supply;
• Contractual phase: creation of a formal
relationship between buyer and seller, covering
contract negotiation and validation operations;
• Ordering and Logistics phase: placing of
purchase order, delivery of goods and services;