Contract Clause Drafting Flashcards
7 cards from real CBN practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contract Clause Drafting flashcards as text
Which clause type specifies the consequences if a party fails to meet a contractual deadline?
Answer: Time-is-of-the-essence clause
A time-is-of-the-essence clause makes contractual deadlines material terms, so missing them constitutes a breach.
In drafting a limitation of liability clause, which approach best protects both parties?
Answer: Cap liability at the total contract value paid in the prior 12 months
Capping liability at total contract value paid over 12 months is commercially reasonable and more likely to be enforceable.
What is the primary purpose of a representations and warranties clause in a commercial contract?
Answer: To allocate risk by having each party attest to factual statements about themselves
Representations and warranties allocate risk by requiring each party to confirm specific facts as true at the time of signing.
A 'most favored nation' (MFN) clause in a supply agreement guarantees that:
Answer: The buyer receives the same pricing as the seller's best customer
An MFN clause ensures the buyer will not pay more than the seller's most favorable customer for comparable goods or services.
When drafting a non-solicitation clause, which element is most critical for enforceability in the US?
Answer: Defining a reasonable time period and specific categories of protected individuals
US courts routinely invalidate overbroad non-solicitation clauses; reasonable duration and clear scope of protected persons are essential.
Which clause allows a party to terminate a contract without cause, typically with advance notice?
Answer: Termination for convenience clause
A termination for convenience clause permits exit without proving the other party breached, usually requiring advance written notice.
What is the function of a 'step-in rights' clause in a long-term services contract?
Answer: It allows a lender or principal to take over performance if the contractor defaults
Step-in rights allow a lender or client to assume control of contract performance to prevent disruption if the main contractor fails.