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
A buyer's standard contract includes a 'most favored customer' (MFC) clause. What obligation does this place on the supplier?
Answer: To provide the buyer with at least the same pricing offered to any other customer
An MFC clause requires the supplier to ensure the buyer receives pricing no less favorable than what is offered to any comparable customer.
What is 'novation' in the context of commercial contract management?
Answer: Replacing one party or obligation with a new one, with all parties' consent
Novation extinguishes an existing contractual obligation and replaces it with a new one, typically substituting a new party, which requires all original parties' consent.
During negotiations, one party uses 'bracketing' as a tactic. What does this involve?
Answer: Making a counteroffer that places the target outcome at the midpoint between two positions
Bracketing involves proposing positions on either side of your actual target so that a midpoint compromise lands exactly where you want.
A contract's 'severability clause' serves what function?
Answer: It ensures that if one provision is found invalid, the rest of the contract remains enforceable
A severability clause protects the overall contract by ensuring that the invalidity of one clause does not void the entire agreement.
What does 'time is of the essence' language in a contract signify?
Answer: Meeting specified deadlines is a material obligation, and failure constitutes a breach
When a contract states 'time is of the essence,' timely performance is a core obligation, meaning any delay can constitute a material breach entitling the other party to remedies.
A commercial manager is using a 'total cost of ownership' (TCO) analysis in supplier negotiations. What does TCO encompass beyond the purchase price?
Answer: All costs over the life of the acquisition including acquisition, operating, maintenance, and disposal costs
TCO analysis captures the full cost of acquiring, using, and disposing of a product or service over its entire lifecycle, not just the initial price.
What is the primary risk of an 'entire agreement' (merger) clause in a commercial contract?
Answer: It excludes pre-contractual representations and oral agreements from the contract's terms
An entire agreement clause means the written contract is the complete expression of the parties' deal, extinguishing any prior oral promises or representations that aren't included.