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

Cost-Plus-Fixed-Fee contracts require the buyer to reimburse all allowable costs plus a fixed fee, regardless of final cost, placing maximum risk on the buyer.

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

Liquidated damages clauses pre-establish a monetary remedy for specific contract breaches, most commonly late delivery, avoiding the need to prove actual damages.

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

A force majeure clause relieves a party of liability when extraordinary events such as natural disasters or wars prevent contract performance.

Question 4

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

Accepted Answer

Change Order

Answer

A change order is the formal instrument used to modify an executed contract's terms, including scope, price, or delivery schedule.

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

Substantial completion means the deliverable functions for its intended purpose, allowing the buyer to take beneficial use while minor punch-list items are still resolved.

(APP) Accredited Purchasing Practitioner Certification Practice Test

(APP) Accredited Purchasing Practitioner Certification Practice Test

APP APP Contract Management & Administration