Exam 14: Contract Management

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

The _____ clause in a contract ensures that all information, technology, and so on shared between the parties remain confidential and are not shared with other customers or suppliers.

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

In a firm fixed price contract, if market prices _____ the stated contract price because of outside factors such as competition, changes in technology, or raw material prices, the _____ assumes the risk or financial loss.

The _____ clause of a contract outlines the relationship between the Agreement and any other purchase orders issued by the company to the supplier.

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

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.

A/An _____ is new intellectual property (such as tools, methodologies, and knowledge) developed as the result of the interaction between the enterprise and the consulting company.

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

In a _____ contract, the supplier receives reimbursement for all of its allowable costs up to a predetermined amount plus a fixed fee, which typically represents a percentage of the targeted cost of the good or service being procured.

In a firm fixed price contract, if the supplier increases its contract price in anticipation of rising costs, and the anticipated conditions do not occur, then the purchaser has paid too high a price for the good or service.

Long-term contracts can help the buyer to gain exclusive access to proprietary supplier technology, and blocking competitor access to this supplier technology can result in at least a short-term competitive advantage for the buyer.

_____ are based on the notion that as purchase volume increase, cost structures change.

Purchasers cannot rely on an arbitration clause contained in their forms, particularly if the suppliers' forms do not contain such a clause.

A carefully worded and prepared contract is not subject to any form of dispute or disagreement.

Agreeing to a short-term contract frequently allows the buyer to have access to more detailed cost and price information from the supplier in exchange for the shorter contract term.

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

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

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

The _____ clause of a contract stipulates whether either party has the ability to terminate the contract at any time, and how much advance notice must be given.