A formal contract is a contract where the parties have signed under seal. A formal contract is binding, where both parties agree to each comply with each other's wishes to a certain limit. Formal contracts require:

1. Standardization of process: SGBs can achieve significant improvements by standardizing and pre-approving as much contract language as possible.
2. Contractual transparency: Articulating contract management KPIs offers a more transparent set of goals for the entire organization.
3. Contractual transparency: Articulating contract management KPIs offers a more transparent set of goals for the entire organization.
4. Monitoring and review: SGBs to continue monitoring that all contracts are reviewed, and when applicable renewed in a timely manner
5. Contractual endorsements: SGBs to implement a system to ensure all employees sign contracts before commencement of employment and ensure timely renewals. Copies of signed contracts to be maintained by the SGB.