APP Contract Management & Administration Flashcards

Which contract type places the greatest financial risk on the buyer?

Answer: Cost-Plus-Fixed-Fee (CPFF)

Cost-Plus-Fixed-Fee contracts require the buyer to reimburse all allowable costs plus a fixed fee, regardless of final cost, placing maximum risk on the buyer.

A 'liquidated damages' clause in a purchase contract is best described as:

Answer: A pre-agreed amount the seller pays for specific breaches such as late delivery

Liquidated damages clauses pre-establish a monetary remedy for specific contract breaches, most commonly late delivery, avoiding the need to prove actual damages.

What is the primary purpose of a contract 'force majeure' clause?

Answer: To excuse performance obligations caused by unforeseeable events beyond a party's control

A force majeure clause relieves a party of liability when extraordinary events such as natural disasters or wars prevent contract performance.

Which document formally authorizes a change to an existing purchase contract's scope, price, or schedule?

Answer: Change Order

A change order is the formal instrument used to modify an executed contract's terms, including scope, price, or delivery schedule.

In contract administration, 'substantial completion' typically means:

Answer: The deliverable is usable for its intended purpose even if minor items remain

Substantial completion means the deliverable functions for its intended purpose, allowing the buyer to take beneficial use while minor punch-list items are still resolved.

Which practice BEST protects a buyer's rights when a supplier consistently delivers late?

Answer: Issuing a formal cure notice requiring corrective action within a defined timeframe

A formal cure notice documents the breach, sets a remedy deadline, and creates the paper trail needed to support termination or damages claims if performance does not improve.