Vendor & Contractor Management Flashcards

Which document protects a community association from financial losses if a contractor abandons a project midway?

Answer: Performance bond

A performance bond is issued by a surety company and pays the association to complete the project if the bonded contractor defaults.

A community manager notices a vendor consistently arrives late and skips certain contracted tasks. What is the correct first step?

Answer: Document the deficiencies in writing and issue a formal notice to the vendor per contract terms

Written documentation and formal notice creates a record of non-performance and gives the vendor an opportunity to cure, as required by most contracts before termination.

What is the risk of allowing a vendor to begin work before a signed contract is in place?

Answer: The association may have limited legal recourse if disputes arise over scope, price, or liability

Without a signed contract, enforcing agreed-upon terms, resolving disputes, and establishing liability becomes legally difficult.

When a vendor contract includes an automatic renewal clause, what should the community manager do well before the renewal date?

Answer: Review performance, compare market pricing, and provide written notice of non-renewal if rebidding is desired

Proactive review before an auto-renewal deadline preserves the association's negotiating position and ensures competitive pricing is maintained.

Which of the following best describes the purpose of an indemnification clause in a vendor contract?

Answer: It requires the vendor to defend and hold the association harmless from claims arising out of the vendor's negligence

An indemnification clause shifts legal and financial responsibility to the vendor for claims caused by their own negligence or misconduct.

A community association wants to hire a new elevator maintenance company. The state requires elevator contractors to hold a specific license. What must the manager verify before awarding the contract?

Answer: That the vendor holds a current, valid elevator contractor license issued by the state

Verifying required state licensure ensures the vendor is legally authorized to perform the work and protects the association from regulatory violations.

What is the best practice when a longtime vendor requests a significant price increase at contract renewal?

Answer: Solicit competing bids to benchmark market pricing before negotiating or accepting the increase

Competitive benchmarking gives the manager data to negotiate effectively or justify switching vendors, fulfilling the fiduciary duty to homeowners.