Exam 14: Contract Management

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

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

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.

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.

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

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

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.

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.

_____ 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.

Escalation clauses allow only increases in the base price.

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

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.

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

Perhaps the most compelling reason to consider a short-term contract, from the buyer's perspective, is that such contracts may reduce the level of risk incurred if longer-term contracts are employed.

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

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

The _____ clause in a contract establishes where bills, invoices, notices, and other documents should be sent, as well as the key contact person at the buying and supplying companies to whom all questions and issues concerning the relationship.

An important factor to consider when hiring an outside consultant to perform contract services for a company is that such a person is the purchasing company's employee, not its agent.

The _____ the term of the purchase agreement, the _____ firm fixed-price contracts will be acceptable to the supplier.

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