Exam 14: Contract Management

If suppliers are not forthcoming with labor and material cost data, cost models can be developed to improve the buyer's negotiating position using material/labor ratios available from industry databases.

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

Cost-sharing contracts are especially important during a period when raw material prices are decreasing.

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.

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.

_____ 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.

One of the leading causes for failure of systems contracts is that buyers get locked into price structures that do not adequately reflect changes that have occurred once the agreement is signed.

The _____ clause of a contract specifies the terms for supply and delivery of the product or service.

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

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

[A/An] _____ is an intervention between conflicting parties to promote reconciliation, settlement, or compromise.

It is typically easy to go back and negotiate what contractual terms actually mean once the contract has been signed and a period of time has passed.

The ____ clause of a contract defines what is in and out of scope, which might include the geographical limitations, the validity or invalidity of prior contracts, preferential treatment by the supplier, or other elements.

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

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

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

In a fixed price contract with escalation, all price changes should be keyed to a third-party price index, preferably to a well-established, widely published index.

In the firm fixed price contract, the price stated in the agreement does not change, regardless of fluctuations in general overall economic conditions, industry competition, levels of supply, market prices, or other environmental changes.

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

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.