Web Services-based solutions for interoperating processes are considered to be one of the most promising technologies for achieving truly interoperable functioning in open environments. In the last three years, the specification in particular of agreements between resource / service providers and consumers, as well as protocols for their negotiation have been proposed as a possible solution for managing the resulting computing systems. In this report, the state of the art in the area of contract-based web service applications is closely studied, identifying current limitations and possibilities. On the basis of this analysis, a general model for contract specification, negotiation, agreement, execution and management is introduced. Such a model has broad applicability both in electronic business integration and distributed knowledge management systems for decision support. Initial work presented here was completed in September 2005 and is published here as background for the European Commission funded project IST CONTRACT http://www.ist-contract.org/.