Most contracts are grounded in other contracts (eg law, standards, conventions). A contract is between parties, typically customers and suppliers in a value chain. Other options include employer and employee in an employment contract, client and server in a service contract, and buyer and seller in a sales contract
The actions to be taken by each party in every possible state of affairs, are defined in contract clauses, including its fulfillment, cancellation and violation. Each results in another state of affairs coming into effect, which is ultimately the terminating clause of the contract. A set of clauses oblige, permit or prohibit each party to perform processes in terms of the contract, where permission and prohibition are types of authorization. The appropriate process may be instantiated in terms of the contract, and, when completed, results in a new state of affairs.
The contract and its parties, clauses, and processes are identified by name, and each party must have at least one address by which it is located. This is typically a physical or postal address, but may also be an e-mail, EDI, EFT or other address according to the medium by which the parties choose to communicate. The contract may exist as an independent entity referenced by its parties, or each party may record just those clauses appertaining to its rights and obligations.