CPSM CPSM Contract Management & Negotiation

Question 1

Which contract type places the greatest financial risk on the buyer?

Accepted Answer

Cost-plus-percentage-of-cost

Answer

Firm-fixed-price

Answer

Time-and-materials

Answer

Fixed-price-incentive

Question 2

What is the primary purpose of a liquidated damages clause in a supply contract?

Accepted Answer

To pre-establish compensation for specific contract breaches such as late delivery

Answer

To penalize suppliers for poor quality

Answer

To limit the buyer's total liability

Answer

To define warranty terms

Question 3

In CPSM negotiations, BATNA stands for:

Accepted Answer

Best Alternative To a Negotiated Agreement

Answer

Baseline Assessment of Total Net Assets

Answer

Budget Allocation To Negotiate Agreements

Answer

Benchmark Analysis for Trade and Negotiation

Question 4

Which contract clause protects a buyer when a supplier's costs rise due to unforeseen external economic events?

Accepted Answer

Economic price adjustment clause

Answer

Indemnification clause

Answer

Force majeure clause

Answer

Termination for convenience clause

Question 5

A supply manager discovers that a key contract contains no intellectual property (IP) ownership clause. What is the most significant risk?

Accepted Answer

The supplier could retain ownership of IP developed under the contract

Answer

The supplier may charge higher prices

Answer

The contract may be unenforceable

Answer

Delivery timelines may be impacted

Question 6

Which negotiation tactic involves deliberately starting with an extreme opening position to anchor the final outcome?

Accepted Answer

Anchoring

Answer

Good cop/bad cop

Answer

Nibbling

Answer

Deadline pressure