APP APP Contract Management & Administration

Question 1

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

Accepted Answer

Cost-Plus-Fixed-Fee (CPFF)

Answer

Firm Fixed-Price (FFP)

Answer

Time and Materials (T&M)

Answer

Indefinite Delivery Indefinite Quantity (IDIQ)

Question 2

A 'liquidated damages' clause in a purchase contract is best described as:

Accepted Answer

A pre-agreed amount the seller pays for specific breaches such as late delivery

Answer

A penalty charged by regulators for contract violations

Answer

A clause allowing the buyer to cancel without cause

Answer

A fee for modifying contract scope

Question 3

What is the primary purpose of a contract 'force majeure' clause?

Accepted Answer

To excuse performance obligations caused by unforeseeable events beyond a party's control

Answer

To set payment milestones

Answer

To define intellectual property ownership

Answer

To establish dispute resolution procedures

Question 4

Which document formally authorizes a change to an existing purchase contract's scope, price, or schedule?

Accepted Answer

Change Order

Answer

Request for Proposal (RFP)

Answer

Purchase Requisition

Answer

Statement of Work (SOW)

Question 5

In contract administration, 'substantial completion' typically means:

Accepted Answer

The deliverable is usable for its intended purpose even if minor items remain

Answer

The seller has invoiced for 100% of the contract value

Answer

All contract milestones have been formally closed

Answer

The buyer has accepted and paid the final invoice

Question 6

Which practice BEST protects a buyer's rights when a supplier consistently delivers late?

Accepted Answer

Issuing a formal cure notice requiring corrective action within a defined timeframe

Answer

Verbally warning the supplier at the next meeting

Answer

Immediately terminating the contract without notice

Answer

Reducing the payment on the current invoice