Question 1

A/An _____ generally runs for a 12-month period and may or may not come up for renewal at the end of the year.

Accepted Answer

An "annual contract" generally runs for a 12-month period and may or may not come up for renewal at the end of the year. National contracts are agreements between two or more companies across the nation, while an open-ended agreement does not have a specific end date. A blanket order is an agreement to purchase a certain amount of goods or services over a specific period of time. Therefore, the best choice for the given statement is option B.

Question 2

Which of the following is not an example of a contingency element of a long-term contract?

Accepted Answer

The answer of Which of the following is not an...

Question 3

The _____ clause in a contract describes how an issue will be addressed if a portion of the agreement is void or unenforceable and which court of law will resolve the difference.

Accepted Answer

The clause described in the question is the severability clause. This clause states that if any portion of the agreement is found to be void or unenforceable, the remaining portions will still be valid and enforceable. It also typically includes information about which court of law will resolve any disputes related to the contract.

Question 4

A/An _____ clause allows the buyer (and possibly the supplier) to terminate the contract if either side fails to live up to contractual requirements.

Accepted Answer

An "escape clause" allows the buyer (and possibly the supplier) to terminate the contract if either side fails to live up to contractual requirements. Penalty clauses impose a financial penalty for breaching the contract. Evergreen contracts renew automatically unless terminated by one party. Systems contracts involve ongoing maintenance and support for a product or service. Time and materials contracts pay for the actual time and resources used by the supplier.

Question 5

The _____ clause of a contract specifies terms such as "current price," "prior price," and other criteria that determine how or if prices will be adjusted over the course of the contract.

Accepted Answer

The payment clause of a contract typically includes details on how and when payments will be made, including any adjustments to prices based on specific criteria. This could include factors such as current or prior prices, as well as any other terms related to price adjustments.

Question 6

_____ involves spending more time in the initial contracting stages to fully understand stakeholder requirements, expectations, and repeated communication of expectations, to gain a full understanding of elements.

Accepted Answer

Preventive contracting involves spending more time in the initial contracting stages to fully understand stakeholder requirements, expectations, and repeated communication of expectations, to gain a full understanding of elements. The goal is to prevent disputes and conflicts from arising during the course of the project. Arbitration and mediation are methods of resolving disputes, while contingency contracting involves planning for unforeseen events that may impact the project.

Question 7

Which of the following is not one of the basic levels of service that a systems supplier can provide to the buyer?

Accepted Answer

The answer of Which of the following is not one...

Question 8

A/An _____ is similar to a/an _____ but allows the addition of items not originally included in the blanket order and may also allow the original purchase order to be extended for a longer term.

Accepted Answer

An open-ended order is similar to a blanket order, but it allows for additional items to be added and the original order to be extended for a longer term. A national contract or national buying agreement refers specifically to an agreement with a supplier or vendor, whereas an open-ended or blanket order refers more generally to a type of purchasing agreement. A closed-end order typically refers to a one-time purchase with a specific end date, which is the opposite of an open-ended or blanket order. Finally, a pricing agreement may refer to a specific agreement on price rather than on the scope of items included in the order, and it may or may not have the same flexibility as an open-ended or blanket order.

Question 9

The _____ clause in a contract ensures that all information, technology, and so on shared between the parties remain confidential and are not shared with other customers or suppliers.

Accepted Answer

The confidentiality clause in a contract ensures that all confidential information shared between parties remain private and are not shared with third parties. This protects the privacy and security of both parties involved.

Question 10

A/An _____ occurs in situations in which a buyer is allowed to automatically discount the published purchase price by a negotiated percentage for all purchases from a given price list or catalog during the contract period.

Accepted Answer

A pricing agreement allows a buyer to get a negotiated discount on the published purchase price for all purchases made from a vendor's catalog or price list during the contract period. The discount is calculated automatically based on the agreed-upon percentage, and the pricing agreement can help both parties achieve cost savings and streamline purchasing processes. Therefore, option A is the best choice.

Question 11

A/An _____ is nonbinding on either the purchaser or the supplier and typically provides discounts to corporate buyers based on total volume for the corporation as a whole, not for any subunits individually.

Accepted Answer

The description of a nonbinding agreement that provides discounts based on volume for the corporation as a whole is consistent with a national buying agreement, which typically covers multiple locations or entities within a corporation. An annual contract is a binding agreement for a set period of time, while a pricing agreement may or may not be binding and typically covers specific products or services. A corporate agreement is a broad term that could refer to various types of agreements between companies. An escape clause is a provision that allows a party to terminate an agreement under certain conditions.

Question 12

In a _____ contract, the supplier receives reimbursement for all of its allowable costs up to a predetermined amount plus a fixed fee, which typically represents a percentage of the targeted cost of the good or service being procured.

Accepted Answer

A cost plus fixed-fee contract is the only option given that includes reimbursement for allowable costs up to a predetermined amount as well as a fixed fee for the supplier. The other options only include a fixed price or an hourly rate for services.

Question 13

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the agreement.

Accepted Answer

A corporate agreement specifies that business units within a corporate organization must buy from specific suppliers during the term of the agreement.

Question 14

The _____ clause of a contract stipulates the court of law where any disputes will be settled.

Accepted Answer

The governing law clause specifies the jurisdiction whose law will govern the interpretation and enforcement of the contract, and the court that will have jurisdiction to resolve disputes.

Question 15

The _____ clause of a contract stipulates whether the supplier can assign its rights described in the agreement to another party and whether subcontracting is permissible.

Accepted Answer

The assignment and contracting clause specifically outlines whether the supplier can assign its rights and whether subcontracting is allowed, making it the correct answer. The other options listed are not directly related to this provision.

Question 16

The _____ clause of a contract identifies any free trade issues and benefits and how to share the benefits.

Accepted Answer

The free trade areas clause of a contract typically contains provisions regarding the treatment of goods or services traded between countries and how any associated benefits will be shared. It is separate from other clauses such as assignment and contracting, key performance indicators and compensation, payment, and scope of agreement.

Question 17

A _____ is defined as a purchase that is made on a nonrecurring or limited basis with little or no intention of developing an ongoing relationship with the supplier.

Accepted Answer

A spot contract, also known as a one-time purchase or a spot buy, is a purchase made on a nonrecurring basis with little or no intention of developing an ongoing relationship with the supplier. It is typically used for one-time or urgent needs, and the buyer may choose from a variety of suppliers to fulfill the order.

Question 18

_____ is defined as the submission of a disagreement to one or more impartial persons with the understanding that the parties will abide by the decision.

Accepted Answer

Arbitration is a process where a neutral third party listens to both sides of a dispute and makes a final decision. The decision of the arbitrator is binding on both parties, meaning they must abide by it. This process is often used in cases where the parties involved do not want to go through the expense and time required for a court hearing.

Question 19

The most basic contractual pricing mechanism is called a/an _____ contract.

Accepted Answer

A firm fixed price contract is the most basic pricing mechanism, where the price is set and agreed upon between the buyer and the seller, and remains fixed for the duration of the contract. There are no adjustments for cost increases or decreased expenses.

Question 20

[A/An] _____ is a form of presentation, involving an exchange of information between managers from each organization involved in the dispute.

Accepted Answer

A mini trial is a form of presentation designed to facilitate the resolution of a dispute, typically involving an exchange of information between managers from each organization involved. This process is aimed at finding a mutually acceptable solution without the need for a formal trial or arbitration.

Quiz 14: Contract Management