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
Under the UCC (Uniform Commercial Code), what is the 'battle of the forms' problem?
Answer: Conflicting terms when buyers and sellers exchange standard form contracts
The 'battle of the forms' arises under UCC Article 2 when a buyer's purchase order and a seller's acknowledgment contain different or additional terms, creating uncertainty about which terms govern.
A contract clause states: 'Neither party shall be liable for consequential, incidental, or punitive damages.' What type of clause is this?
Answer: Limitation of liability clause
A limitation of liability clause caps or excludes specific categories of damages, protecting parties from potentially unlimited financial exposure.
When negotiating a long-term supply contract, a buyer requests an 'audit right' clause. What does this entitle the buyer to do?
Answer: Inspect the supplier's financial records and operations to verify compliance
An audit right clause gives the buyer the contractual authority to examine the supplier's books, records, and processes to ensure compliance with contract terms.
What is the key difference between 'representations' and 'warranties' in a commercial contract?
Answer: Representations are statements of current fact; warranties are ongoing promises or guarantees
Representations are statements of present or past fact that induce a party to enter the contract, while warranties are ongoing promises that certain facts will remain true.
A contract includes a 'step-in right' clause in favor of the buyer. When would this clause typically be triggered?
Answer: When the supplier fails to perform and the buyer assumes direct control to ensure continuity
A step-in right allows the buyer to take over the supplier's operations or bring in a replacement supplier when the original supplier critically fails to perform.
In contract management, what is a 'change order' and why must it be managed carefully?
Answer: A formal document authorizing modifications to scope, schedule, or cost that prevents scope creep
A change order formally documents and authorizes contract modifications, preventing unauthorized scope creep and ensuring all parties agree to new terms before work begins.
Which of the following best describes 'price escalation clauses' in long-term commercial contracts?
Answer: Provisions that allow automatic price increases tied to an index such as CPI
Price escalation clauses link contract pricing to an external index (like CPI or PPI), automatically adjusting prices to reflect changes in costs over the contract term.