Exam 14: Contract Management

Once a long-term contract with a supplier has been executed, it is much more difficult (and expensive) to switch suppliers.

In construction contracts, penalty clauses are technically called "liquidated damages clauses;" if they are labeled "penalty" clauses, there is a long line of cases that says they are not enforceable.

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.

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

Under a fixed-price contract, increasing factor market prices will place more risk on the purchasing organization whereas decreasing such prices will shift the contract economic risk to the supplying organization.

Cost-based contracts are inappropriate for situations in which there is a risk that a large contingency fee might be included.

A major concern with many outsourced system contracts today is that much of this work is going overseas to countries such as India.

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

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.

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

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

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

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

The _____ clause in a contract provides guidelines regarding what type of reporting statistics and measures the supplier must provide to the buyer on a regular basis, defined clearly.

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

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

_____ refers to the volatility of pricing conditions for major elements of the product, such as raw materials, purchased components, and labor.

In the _____ approach to a systems supplier's level of service, the client company essentially turns over the entire outsourced service at a given point in time.

The _____ clause of a contract generally specifies who is responsible if there are injuries or damage, over the course of the contract, and any damages to be paid.

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