APP Contract Management & Administration Flashcards

Which element is NOT typically required for a contract to be legally enforceable in the US?

Answer: A notarized signature

US contract law requires offer, acceptance, consideration, capacity, and legality — notarization is not a general requirement for commercial contracts.

A buyer includes an 'audit rights' clause in a vendor contract primarily to:

Answer: Permit review of the supplier's cost records to verify charges on cost-reimbursable work

Audit rights clauses allow buyers to inspect supplier cost records, ensuring that reimbursable charges are accurate, allowable, and properly documented.

The Uniform Commercial Code (UCC) Article 2 primarily governs:

Answer: Sale of goods transactions

UCC Article 2 provides the default legal framework for the sale of goods in the United States, covering formation, performance, and breach of goods contracts.

When a contract is 'terminated for convenience' by the buyer, the seller is generally entitled to:

Answer: Recovery of allowable costs incurred plus a reasonable profit on work performed

Termination for convenience entitles the seller to reimbursement of costs incurred and a fair profit for work done up to termination, but not the full contract value.

What is 'privity of contract' and why does it matter in procurement?

Answer: The legal principle that only contract parties have enforceable rights under that contract

Privity of contract limits enforceable rights to the direct parties, meaning a buyer generally cannot enforce terms directly against a subcontractor with whom it has no contract.

A 'most favored customer' (MFC) clause in a supply agreement requires the seller to:

Answer: Offer the buyer pricing and terms no worse than those given to any other customer

An MFC clause guarantees that the buyer will always receive the best prices and terms the seller offers to any comparable customer.