Question 1

Technically,penalty clauses are called liquidated damages clauses; if they are labeled penalty clauses,there is a long line of cases that say they are not enforceable.

Accepted Answer

A) True 
 B)False

Question 2

There is an incentive in the short run for suppliers to be inefficient in cost-based contracts because they are rewarded with higher prices.

Accepted Answer

A) True 
 B)False

Question 3

It is always a good idea to double-check all attachments to the contract because many of the technical details are included here.

Accepted Answer

A) True 
 B)False

Question 4

As the total dollar value/unit cost of the contract decreases,purchasers must spend less effort creating effective pricing mechanisms.

Accepted Answer

A) True 
 B)False  False

Question 5

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

Accepted Answer

A)   fixed price with escalation
B)   cost plus incentive fee
C)   firm fixed price
D)   cost-sharing
E)   fixed price with redeterminationF) A) and B)
G) All of the above

Question 6

The least appropriate method of drafting a new contract is to start with a general form and samples of past contracts for similar situations.

Accepted Answer

A) True 
 B)False

Question 7

Cost-based contracts are generally applicable when the goods or services procured are expensive,complex,and important to the purchaser or when there is a high degree of uncertainty regarding labor and material costs.

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

A)   most favored customer
B)   liability
C)   specifications, quality, and health, safety, environment
D)   scope of agreement
E)   force majeureF) A) and E)
G) C) and E)

Question 9

If the client company does not withhold income taxes,a consultant will normally be viewed as an employee,not as an independent contractor.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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 facilitiesF) A) and B)
G) B) and D)

Question 11

Even when there is no contract,most transactions are covered by a "gap filler" known as the Uniform Commercial Code.

Accepted Answer

A) True 
 B)False

Question 12

All of the following are major issues to be considered with respect to e-commerce contract issues except ____.

Accepted Answer

A)   parity between electronic and paper records
B)   enforceability of shrinkwrap, clickwrap, and boxtop agreements and licenses
C)   attribution procedures
D)   digital signatures
E)   location of the supplier's facility in relationship to the buyer's locationF) A) and E)
G) D) and E)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A/An ____ clause assumes the contract will be renewed every year unless the supplier is otherwise notified that this is not the case.

Accepted Answer

A)   evergreen
B)   due diligence
C)   penalty
D)   escape
E)   None of these choices.F) None of the above
G) A) and B)

Question 15

Long-term contracts should be written to avoid incentive or cost-sharing arrangements.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

A)   force majeure
B)   severability
C)   notices
D)   intellectual property
E)   supply and deliveryF) C) and D)
G) A) and E) B

Question 18

____ 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.

Accepted Answer

A)   Arbitration
B)   Mediation
C)   Contingency contracting
D)   Preventive contracting
E)   None of these choices.F) B) and D)
G) B) and E)

Question 19

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.

Accepted Answer

A)   rise above....purchaser
B)   rise above....seller
C)   fall below....seller
D)   stay the same....seller
E)   None of these choices.F) C) and D)
G) A) and C) B

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)   mediation
B)   arbitration
C)   rent-a-judge
D)   minitrial
E)   dispute preventionF) B) and D)
G) A) and B)

Exam 14: Contract Management

Technically,penalty clauses are called liquidated damages clauses; if they are labeled penalty clauses,there is a long line of cases that say they are not enforceable.

Correct AnswerverifiedShow Answer

There is an incentive in the short run for suppliers to be inefficient in cost-based contracts because they are rewarded with higher prices.

Correct AnswerverifiedShow Answer

It is always a good idea to double-check all attachments to the contract because many of the technical details are included here.

Correct AnswerverifiedShow Answer

As the total dollar value/unit cost of the contract decreases,purchasers must spend less effort creating effective pricing mechanisms.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

The least appropriate method of drafting a new contract is to start with a general form and samples of past contracts for similar situations.

Correct AnswerverifiedShow Answer

Cost-based contracts are generally applicable when the goods or services procured are expensive,complex,and important to the purchaser or when there is a high degree of uncertainty regarding labor and material costs.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

If the client company does not withhold income taxes,a consultant will normally be viewed as an employee,not as an independent contractor.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Even when there is no contract,most transactions are covered by a "gap filler" known as the Uniform Commercial Code.

Correct AnswerverifiedShow Answer

All of the following are major issues to be considered with respect to e-commerce contract issues except ____.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A/An ____ clause assumes the contract will be renewed every year unless the supplier is otherwise notified that this is not the case.

Correct AnswerverifiedShow Answer

Long-term contracts should be written to avoid incentive or cost-sharing arrangements.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedB

____ 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.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

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.

Correct Answer
verified
B

Correct Answer
verified