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Commercial Contract Negotiation & Management Flashcards

7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Commercial Contract Negotiation & Management flashcards as text

  1. During contract negotiations, a supplier insists on a 'material adverse change' (MAC) clause. What is the primary purpose of this clause?

    Answer: To permit a party to exit the contract if significant negative changes occur to the other party

    A MAC clause allows a party to terminate or renegotiate if the other party experiences a significant negative change in financial condition or business circumstances.

  2. A company wants to protect its proprietary processes during contract negotiations. Which contract provision best addresses this need?

    Answer: Non-disclosure agreement (NDA) or confidentiality clause

    An NDA or confidentiality clause legally restricts the other party from disclosing or misusing proprietary information shared during and after negotiations.

  3. When a contract contains an 'evergreen' provision, what does this mean for the parties?

    Answer: The contract automatically renews unless a party provides notice to terminate

    An evergreen provision causes the contract to automatically renew at the end of each term unless one party provides timely notice of intent not to renew.

  4. A commercial manager discovers that a signed contract contains a mutual mistake about a fundamental fact. What is the most appropriate legal remedy?

    Answer: Rescission or reformation of the contract

    A mutual mistake about a fundamental fact may entitle either party to rescind the contract or have it reformed by a court to reflect the true intent.

  5. In contract negotiations, what does 'BATNA' stand for and why is it strategically important?

    Answer: Best Alternative To a Negotiated Agreement — it defines your walk-away point

    BATNA (Best Alternative To a Negotiated Agreement) is your strongest alternative if talks fail, and knowing it prevents you from accepting unfavorable terms.

  6. A contract specifies 'net 30' payment terms. The buyer consistently pays on day 45. What is the seller's best contractual response?

    Answer: Invoke the late payment interest clause and formally notify the buyer

    Invoking the late payment interest clause and providing formal notice puts the buyer on record and enforces contractual rights without escalating to termination prematurely.

  7. Which negotiation tactic involves deliberately starting with an extreme position to anchor the other party's expectations?

    Answer: Anchoring

    Anchoring involves setting an initial extreme position that influences the other party's perception of a reasonable settlement range throughout negotiations.