There is always contact
Sab, I want to clarify that there is never a moment when you drop the contact, you absolutely always have contact on your outside rein but its a live contact as opposed to a static “holding” contact. In your shoulder mirroring your horse’ shoulder, you do not loose the contact because all your are doing is allowing the arc to happen. You ask the horse to stop dropping on the inside of the circle by driving him from your inside leg into your receiving outside hand. And the outside hand is a giving, breathing hand- some people use a knitting or sponge-squeezing analogy.
Also, we are not speaking of having the neck come in, that would not be bend that would be lateral flexion, we want to see the eye lash of the horse, no more.
You can do some leg yielding on the circle spiraling out to get the horse on your outside rein and off its inside shoulder. You can do it going down the centerline, when horse falls on shoulder, do leg yields in opposite direction for a couple of steps.
What also blocks the horse is pulling on the inside rein, which is something that a lot of amateurs do because they are trying to create bend by pulling the neck in, or they pull to stay on the circle. Usually you see the inside hand drop, pull back towards the knee or groin. And the rider also hangs on the outside rein so the horse twist its neck, shots its haunches out and pretty much cant go forward.
This is stuff that I have had to work on extensively because I was the queen of dropping contact, and this approach works very well to supple the horse and teach the rider to have even contact in the rein but have a spiral seat when needed: circle, corners,etc…