Question 1

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 delivery

Question 2

The use of automated online catalogs by major suppliers of MRO items allows users to buy directly from blanket orders and national contracts from their desktops.

Accepted Answer

A) True 
 B)False

Question 3

A/An _____ is similar to a/an _____ but allows the addition of items not originally included in the blanket order and may also allow the original purchase order to be extended for a longer term.

Accepted Answer

A) closed-end order….open-ended order 
B) national contract….national buying agreement 
C) open-ended order….blanket order 
D) open-ended order….pricing agreement 
E) blanket order….national buying agreement

Question 4

Which of the following is not one of the factors to consider when deciding which dispute-resolution mechanism to use?

Accepted Answer

A) Status of the relationship between the parties in the dispute. 
B) Type of outcome desired by the purchaser. 
C) Type of contract leading to the dispute. 
D) Level of emotion displayed by the principals. 
E) None of these answers.

Question 5

Taking a dispute into the jurisprudence system should be an automatic step in resolving the dispute, and not viewed as a last resort in resolving contractual disputes.

Accepted Answer

A) True 
 B)False

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

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 answers.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

In global commerce, people assume that the terms of one market are acceptable in another and do not recognize cultural or legal landmines.

Accepted Answer

A) True 
 B)False

Question 10

A _____ is defined as a purchase that is made on a nonrecurring or limited basis with little or no intention of developing an ongoing relationship with the supplier.

Accepted Answer

A) purchasing alliance 
B) long-term contract 
C) short-term contract 
D) spot contract 
E) JIT contract

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 defined levels of performance are not maintained.

Accepted Answer

A) key performance indicators and compensation 
B) liability 
C) notices 
D) third-party rights 
E) assignment and contracting

Question 12

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

Accepted Answer

A) cost-sharing 
B) time and materials 
C) fixed-price with incentives 
D) cost plus incentive fee 
E) fixed-price with redetermination

Question 13

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.

Accepted Answer

A) liability 
B) force majeure 
C) confidentiality 
D) third-party rights 
E) governing law

Question 14

Once a contract has been negotiated and signed, the real work is over.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) liability 
B) specifications, quality, and health, safety, environment 
C) intellectual property 
D) assignment and contracting 
E) confidentiality

Question 16

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the agreement.

Accepted Answer

A) corporate agreement 
B) open-ended order. 
C) online MRO catalog 
D) blanket order 
E) open-ended order

Question 17

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

Accepted Answer

A) shorter….less likely 
B) longer….more likely 
C) longer….less likely 
D) longer….same likelihood that 
E) There is no relationship between contract term and acceptability to the supplier.

Question 18

The _____ clause of a contract stipulates the court of law where any disputes will be settled.

Accepted Answer

A) third-party rights 
B) notices 
C) assignment and contracting 
D) governing law 
E) liability

Question 19

Which of the following is not one of the potential advantages of using long-term contracts?

Accepted Answer

A) Assurance of supply. 
B) Volume leveraging. 
C) Access to cost/price information. 
D) Access to supplier technology. 
E) Supplier opportunism.

Question 20

A/An _____ generally runs for a 12-month period and may or may not come up for renewal at the end of the year.

Accepted Answer

A) national contract 
B) annual contract 
C) open-ended agreement 
D) blanket order 
E) None of these answers.

Exam 14: Contract Management

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.

The use of automated online catalogs by major suppliers of MRO items allows users to buy directly from blanket orders and national contracts from their desktops.

A/An _ is similar to a/an _ but allows the addition of items not originally included in the blanket order and may also allow the original purchase order to be extended for a longer term.

Which of the following is not one of the factors to consider when deciding which dispute-resolution mechanism to use?

Taking a dispute into the jurisprudence system should be an automatic step in resolving the dispute, and not viewed as a last resort in resolving contractual disputes.

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.

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.

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

In global commerce, people assume that the terms of one market are acceptable in another and do not recognize cultural or legal landmines.

A _____ is defined as a purchase that is made on a nonrecurring or limited basis with little or no intention of developing an ongoing relationship with the supplier.

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 defined levels of performance are not maintained.

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

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.

Once a contract has been negotiated and signed, the real work is over.

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

A/An _____ specifies that business units within a corporate organization must buy from specific suppliers during the term of the agreement.

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

The _____ clause of a contract stipulates the court of law where any disputes will be settled.

Which of the following is not one of the potential advantages of using long-term contracts?

A/An _____ generally runs for a 12-month period and may or may not come up for renewal at the end of the year.