Question 1

In the ____ contract,if a supplier can demonstrate actual cost savings through production efficiencies or substitution of materials,the resulting savings from the initial price targets are shared between the supplier and the buyer at a predetermined rate.
A) time and materials
B) cost plus fixed fee
C) fixed-price with incentives
D) firm fixed price
E) fixed-price with escalation

Accepted Answer

The description of the contract matches the fixed-price with incentives contract, where the supplier and the buyer agree on predetermined price targets but also agree to share any cost savings resulting from production efficiencies or substitution of materials. This incentivizes the supplier to find ways to reduce costs and share the benefits with the buyer.

Question 2

The ____ clause in a contract describes the course of events that occurs if there are unforeseen events such as earthquakes or hurricanes that prevent a supplier from fulfilling its obligations to the buyer.
A) most favored customer
B) liability
C) specifications, quality, and health, safety, environment
D) scope of agreement
E) force majeure

Accepted Answer

The force majeure clause in a contract is intended to cover events beyond the control of the parties and that make it impossible for one or both parties to fulfill their obligations under the contract. These events are usually natural disasters or other unexpected circumstances, and the clause outlines the steps that the parties will take to handle the situation.

Question 3

In a firm fixed price contract if market prices ____ the stated contract price due to outside factors,such as competition,changes in technology,or raw material prices,the ____ assumes the risk or financial loss.
A) rise above....purchaser
B) stay the same....seller
C) stay the same....purchaser
D) fall below....purchaser
E) None of these choices.

Accepted Answer

In a firm fixed price contract, if market prices fall below the stated contract price due to outside factors, the purchaser assumes the risk or financial loss. This is because the purchaser is locked into the agreed-upon price even if market conditions change, putting the seller at a disadvantage.

Question 4

Perhaps the simplest method of resolving a contractual disagreement involves straightforward,face-to-face negotiation between the two parties involved.

Accepted Answer

This is true. Direct negotiation can often be an efficient and effective way of resolving contractual disputes.

Question 5

The most basic contractual pricing mechanism is called a/an ____ contract.
A) fixed price with escalation
B) cost plus incentive fee
C) firm fixed price
D) cost-sharing
E) fixed price with redetermination

Accepted Answer

A firm fixed price contract is the most basic pricing mechanism where the price is agreed upon upfront and does not change regardless of the actual cost incurred by the contractor.

Question 6

It is important to ensure that an arbitrator's opinion is not binding on both parties to the dispute.

Accepted Answer

An arbitrator's opinion is typically binding on both parties if they have agreed to arbitration as a means of resolving their dispute, unless they have specifically agreed to non-binding arbitration.

Question 7

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.
A) force majeure
B) severability
C) notices
D) intellectual property
E) supply and delivery

Accepted Answer

The severability clause addresses what will happen if any portion of the contract is found to be void or unenforceable. It outlines how the remaining provisions will be affected and which court will decide any disputes that arise as a result. The other options listed are not related to this specific issue.

Question 8

A ____ contract should be used in cases where the parties cannot accurately predict labor or materials costs and quantities to be used prior to the execution of the purchase agreement.
A) fixed-price with escalation
B) firm-fixed price
C) cost sharing
D) time and materials
E) fixed-price with redetermination

Accepted Answer

The answer of A ____ contract should be used in...

Question 9

____ involves spending more time in the initial contracting stages to fully understand stakeholder requirements,expectations,and repeated communication of expectations,in order to gain a full understanding of elements.
A) Arbitration
B) Mediation
C) Contingency contracting
D) Preventive contracting
E) None of these choices.

Accepted Answer

Preventive contracting involves spending more time in the initial contracting stages to fully understand stakeholder requirements, expectations, and repeated communication of expectations in order to gain a full understanding of elements. This helps to prevent issues or conflicts from arising later in the project. Arbitration and mediation are dispute resolution methods, while contingency contracting involves preparing for unforeseen events or risks.

Question 10

The ____ section of a contract defines all of the important terms contained within the contract and is important so everyone understands exactly what each term means.
A) supply and delivery
B) specifications, quality, and health, safety, environment
C) scope of agreement
D) force majeure
E) definitions

Accepted Answer

The definitions section of a contract is where all important terms are defined in order to ensure that everyone involved understands exactly what each term means. This section is crucial for avoiding misunderstandings and disputes down the line.

Question 11

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 certain defined levels of performance are not maintained.
A) key performance indicators and compensation
B) liability
C) notices
D) third-party rights
E) assignment and contracting

Accepted Answer

The key performance indicators and compensation clause defines how the supplier's performance will be measured and if any compensation will be awarded if they fail to meet the defined levels of performance.

Question 12

The ____ contract is generally used in plant and equipment maintenance agreements,where the supplier cannot determine accurate costs prior to the repair service.
A) fixed-price with redetermination
B) firm fixed price
C) cost-sharing
D) time and materials
E) cost plus fixed-fee

Accepted Answer

The time and materials contract is the best choice in plant and equipment maintenance agreements where the supplier cannot determine accurate costs prior to the repair service. This type of contract allows the supplier to bill for the actual time and materials used during the repair, which is useful when the extent of the repair work is uncertain or difficult to estimate beforehand.

Question 13

In many instances,the alternatives to court adjudication are slower than litigation.

Accepted Answer

The statement is incorrect. Generally, alternatives to court adjudication are faster than litigation. Examples include mediation, arbitration, and negotiation.

Question 14

In a/an ____ 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.
A) cost plus fixed-fee
B) fixed-price with redetermination
C) time and materials
D) fixed-price plus fixed-fee
E) None of these choices.

Accepted Answer

In a cost plus fixed-fee contract, the supplier is reimbursed for all allowable costs up to a predetermined amount, plus a fixed fee, which is usually a percentage of the targeted cost of the product or service being procured. This type of contract is typically used when the extent of work to be performed cannot be accurately defined at the outset of the contract or when the materials and labor needed for the project are subject to cost fluctuations.

Question 15

Purchasers cannot rely on an arbitration clause contained in their forms,particularly if the suppliers' forms do not contain such a clause.

Accepted Answer

If a supplier includes an arbitration clause in their form but the purchaser's form does not, the purchaser cannot rely on the arbitration clause unless they explicitly agreed to it in a separate agreement or through conduct establishing an agreement to arbitrate. Therefore, purchasers cannot always rely on an arbitration clause contained in supplier forms, particularly if the suppliers' forms do not contain such a clause.

Question 16

Taking a dispute into the jurisprudence system should be an automatic first step in resolving the dispute as other methods are not as effective.

Accepted Answer

Taking a dispute into the jurisprudence system should not be the automatic first step as other methods such as negotiation, mediation, and arbitration can be more cost-effective and efficient in resolving disputes. Litigation can also be a lengthy process and may not always result in a satisfactory resolution for all parties involved.

Question 17

In a firm fixed price contract if market prices for a purchased good or service ____ the stated contract price,the ____ bears the brunt of the financial loss.
A) rise above....purchaser
B) rise above....seller
C) fall below....seller
D) stay the same....seller
E) None of these choices.

Accepted Answer

In a firm fixed price contract, the seller bears the financial risk if market prices for the purchased good or service rise above the stated contract price. Therefore, option B is the correct choice.

Question 18

The ____ section of a contract specifies method of manufacture and quality requirements and may include language specific to terms of quality.
A) liability
B) specifications, quality, and health, safety, environment
C) intellectual property
D) assignment and contracting
E) confidentiality

Accepted Answer

The "specifications, quality, and health, safety, environment" section of a contract typically outlines the specific requirements for the product or service being provided. This includes details on how it should be produced, the materials that should be used, and any other quality standards that must be met. This section may also include language related to health, safety, and environmental considerations.

Question 19

All of the following are important factors to consider when negotiating with a supplier over contract type except ____.
A) component market uncertainty
B) degree of trust between buyer and seller
C) process or technology uncertainty
D) supplier's ability to impact costs
E) distance between the buyer and supplier facilities

Accepted Answer

The factor of distance between the buyer and supplier facilities is not typically a critical consideration when negotiating the contract type with a supplier. The other factors listed (component market uncertainty, degree of trust, process or technology uncertainty, and supplier's ability to impact costs) are all important to consider in determining the appropriate contract type to use.

Question 20

With a pure ____ contract,allowable costs are shared between the parties on a predetermined percentage basis.
A) cost-sharing
B) time and materials
C) fixed-price with incentives
D) cost plus incentive fee
E) fixed-price with redetermination

Accepted Answer

In a pure cost-sharing contract, the parties agree to share the allowable costs on a predetermined percentage basis. This type of contract is commonly used in research and development projects where the risks and rewards are shared between the parties. The other contract types listed involve different methods of determining the final contract price and do not involve cost-sharing in the same way.

Quiz 14: Contract Management

In the ____ contract,if a supplier can demonstrate actual cost savings through production efficiencies or substitution of materials,the resulting savings from the initial price targets are shared between the supplier and the buyer at a predetermined rate.

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

In a firm fixed price contract if market prices the stated contract price due to outside factors,such as competition,changes in technology,or raw material prices,the assumes the risk or financial loss.

Perhaps the simplest method of resolving a contractual disagreement involves straightforward,face-to-face negotiation between the two parties involved.

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

It is important to ensure that an arbitrator's opinion is not binding on both parties to the dispute.

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.

A ____ contract should be used in cases where the parties cannot accurately predict labor or materials costs and quantities to be used prior to the execution of the purchase agreement.

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

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

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 certain defined levels of performance are not maintained.

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

In many instances,the alternatives to court adjudication are slower than litigation.

In a/an ____ 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.

Purchasers cannot rely on an arbitration clause contained in their forms,particularly if the suppliers' forms do not contain such a clause.

Taking a dispute into the jurisprudence system should be an automatic first step in resolving the dispute as other methods are not as effective.

In a firm fixed price contract if market prices for a purchased good or service the stated contract price,the bears the brunt of the financial loss.

The ____ section of a contract specifies method of manufacture and quality requirements and may include language specific to terms of quality.

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

With a pure ____ contract,allowable costs are shared between the parties on a predetermined percentage basis.