Question 1

All of the following are important factors to consider when negotiating with a supplier over contract type except _____.

Accepted Answer

Physical distance between the buyer and supplier facilities is not directly related to contract type negotiation. The other factors listed have a direct impact on the type of contract that would be most appropriate for the situation.

Question 2

A/An _____ is an agreement that typically covers many different items that can be purchased under the same purchase order number, thereby minimizing repetitive paperwork in the purchasing department for relatively low-cost items.

Accepted Answer

A blanket order is a type of purchasing agreement that covers multiple items that can be purchased under the same purchase order number. This agreement is useful when dealing with low-cost items and helps the purchasing department minimize repetitive paperwork.

Question 3

The _____ contract is generally used in plant and equipment maintenance agreements, where the supplier cannot determine accurate costs prior to the repair service.

Accepted Answer

Time and materials contract is the best choice for plant and equipment maintenance agreements where accurate costs cannot be determined prior to the repair service. This type of contract involves paying for the actual time worked and the materials used, rather than a predetermined price.

Question 4

The _____ clause of a contract outlines the relationship between the Agreement and any other purchase orders issued by the company to the supplier.

Accepted Answer

The purchase orders clause typically includes details such as the terms and conditions attached to purchase orders, the relationship between the purchase orders and the main agreement, and any requirements for the supplier to fulfill the purchase orders. It is important to clarify these details in the contract to avoid confusion and ensure that both parties understand their obligations.

Question 5

The _____ clause of a contract specifies conditions regarding who owns any IP that comes out of the agreement, and who owns what IP going into the agreement.

Accepted Answer

The intellectual property (IP) clause of a contract specifies ownership and usage rights of any IP created during or as a result of the agreement. This includes both pre-existing IP contributed by the parties involved and any new IP developed. It is important for this clause to be clearly defined to avoid disputes over ownership or usage rights.

Question 6

The _____ clause of a contract defines all of the important terms contained within the contract and is important so everyone understands exactly what each term means.

Accepted Answer

The definitions clause of a contract provides clarity on the specific terms used throughout the contract, ensuring everyone has a mutual understanding of what each term means. This is important in avoiding confusion or disputes down the line. The other options are also important clauses in a contract, but do not specifically define the terms used throughout the document.

Question 7

The use of [a/an] _____, or third party, to help settle contractual disputes is the fastest-growing method of conflict resolution among contracting parties, both in the United States and overseas.

Accepted Answer

The use of an outside arbitrator is specifically mentioned in the statement and is described as the fastest-growing method of conflict resolution among contracting parties. The other options, such as rent-a-judge, litigation, mediation, and minitrial, may be forms of dispute resolution, but they are not specifically mentioned in the statement as being the fastest-growing method.

Question 8

A/An _____ specifies that the buyer will buy a certain amount of goods and services for the duration of the agreement.

Accepted Answer

The answer of A/An _____ specifies that the buyer will...

Question 9

The _____ clause in a contract provides specific details on how the supplier's performance will be measured and if any compensation will be awarded by the supplier to the buyer if these defined levels of performance are not maintained.

Accepted Answer

The key performance indicators and compensation clause is specifically designed to outline how the supplier's performance will be measured and if compensation will be awarded if certain levels are not maintained. This clause helps to ensure that both parties are clear on expectations and provides a way to address any issues that may arise during the contract term.

Question 10

The _____ clause in a contract stipulates that any benefits attributed to a third party (other than the buyer or supplier) identified in the contract must be enforced.

Accepted Answer

The clause described in the question refers to third-party rights, which allow for a third party to enforce certain provisions of a contract even though they are not a party to the contract. This is typically done through the use of specific language in the contract that denotes the third party's rights and benefits.

Question 11

All of the following are reasons for suppliers preferring long-term contracts except _____.

Accepted Answer

The statement "the supplier can afford to pay its workforce higher wages to increase productivity" is not a reason for suppliers preferring long-term contracts. The other options listed are all advantages for suppliers who enter into long-term contracts.

Question 12

A/An _____ is defined as a contract purchase that is routinely made over a relatively limited time horizon, typically one year or less.

Accepted Answer

A short-term contract is defined as a contract purchase that is routinely made over a relatively limited time horizon, typically one year or less. The other options such as alliance, partnership, and long-term contract refer to different types of business arrangements and are not necessarily limited in time. A spot contract, on the other hand, refers to a purchase or sale of a commodity or asset for immediate delivery or settlement.

Question 13

In the _____ approach to a systems supplier's level of service, the outsource service supplier takes on only two or three small functions from the client, using a stepping stone approach.

Accepted Answer

The modular approach involves breaking down a project into smaller modules or functions, which can then be outsourced to different vendors. In this approach, the outsource service supplier takes on only two or three small functions from the client, using a stepping stone approach, which matches the description given in the question.

Question 14

A/An _____ contract is designed to provide access to expensive computer networks and software that single companies are unable to afford on their own.

Accepted Answer

A systems contract is designed to provide access to expensive computer networks and software that single companies are unable to afford on their own. This type of contract allows multiple companies to share the costs of the system and its maintenance. Time and materials contracts are typically used for projects with uncertain requirements, where the contractor is reimbursed based on the time and materials used. Firm fixed price contracts have a set price agreed upon by the contractor and the buyer. Cost-sharing contracts are agreements where multiple parties agree to share the costs associated with a project, research, or development effort. Evergreen contracts are agreements that are automatically renewed unless one of the parties decides to terminate it.

Question 15

A/An _____ is a contract purchase that is made on a continuing basis for a specified or indefinite period of time, typically exceeding one year.

Accepted Answer

The definition provided fits the description of a long-term contract, which is a purchase agreement that extends beyond one year and can continue for a specified or indefinite duration. The other choices do not accurately match the given definition.

Question 16

In the _____ approach to a systems supplier's level of service, the service provider and the client company share resources and operational control over the outsourced service.

Accepted Answer

The shared approach involves both the service provider and the client company sharing resources and operational control. The other options are unrelated to this concept.

Question 17

The _____ clause in a contract establishes where bills, invoices, notices, and other documents should be sent, as well as the key contact person at the buying and supplying companies to whom all questions and issues concerning the relationship.

Accepted Answer

The notices clause in a contract specifically outlines where bills, invoices, notices, and other documents should be sent within the relationship. It also identifies the key contact people at both the buying and supplying companies to whom all questions and issues should be directed.

Question 18

The _____ clause of a contract describes the course of events that occur if there are unforeseen calamities such as earthquakes or hurricanes that prevent a supplier from fulfilling its obligations to the buyer.

Accepted Answer

The force majeure clause of a contract typically outlines what happens if unforeseen circumstances, such as natural disasters or acts of war, prevent one or both parties from fulfilling their obligations. It often excuses the affected party’s non-performance and may provide for remedies such as termination of the contract or an extension of time for performance.

Question 19

A/An _____ is new intellectual property (such as tools, methodologies, and knowledge) developed as the result of the interaction between the enterprise and the consulting company.

Accepted Answer

Residuals refer to new intellectual property created through the collaboration between an enterprise and a consulting company, encompassing new tools, methodologies, and knowledge.

Question 20

The _____ clause of a contract specifies whether the buyer, if he or she becomes aware of any technology or cost improvements of other products in the market, he or she can share this information with the supplier and how the supplier should act on this information.

Accepted Answer

The clause describing the sharing of information about technology or cost improvements of other products in the market is known as the technology improvements clause, which is typically included in contracts to facilitate ongoing product development and improvement.

Quiz 14: Contract Management