CCM Contract Management and Negotiation 2 — Questions and Answers
Question 1: A contractor submits a claim for additional costs due to unforeseen site conditions. Which contract clause typically governs this situation?
- Force majeure clause
- Differing site conditions clause (Correct answer)
- Indemnification clause
- Liquidated damages clause
Correct answer: Differing site conditions clause
The differing site conditions clause (also called changed conditions clause) allocates risk for subsurface or latent physical conditions that differ materially from those indicated in the contract.
Question 2: During negotiation, the technique of deliberately making an extreme opening offer to anchor the discussion is known as:
- Bracketing
- Anchoring (Correct answer)
- Nibbling
- Logrolling
Correct answer: Anchoring
Anchoring is a cognitive bias-based negotiation tactic where the first number introduced heavily influences the final outcome by setting a reference point.
Question 3: Which type of contract places the greatest financial risk on the buyer?
- Firm-fixed-price (FFP)
- Cost-plus-fixed-fee (CPFF) (Correct answer)
- Fixed-price-incentive-firm (FPIF)
- Time-and-materials (T&M)
Correct answer: Cost-plus-fixed-fee (CPFF)
Cost-plus-fixed-fee contracts reimburse all allowable costs plus a fixed fee, so the buyer bears virtually all cost overrun risk.
Question 4: A 'battle of the forms' dispute arises when:
- Both parties use standard terms that conflict with each other (Correct answer)
- A party breaches the confidentiality agreement
- The contract is not signed by an authorized agent
- Delivery schedules in the SOW are ambiguous
Correct answer: Both parties use standard terms that conflict with each other
A battle of the forms occurs under UCC Article 2 when both buyer and seller use their own standard purchase orders and acknowledgment forms with conflicting terms.
Question 5: What is the primary purpose of a 'standstill agreement' in contract negotiations?
- To freeze prices during supply chain disruptions
- To pause hostile takeover actions while parties negotiate (Correct answer)
- To suspend contract performance pending dispute resolution
- To prevent subcontractor substitutions mid-project
Correct answer: To pause hostile takeover actions while parties negotiate
A standstill agreement temporarily prohibits a potential acquirer from taking further hostile steps while negotiations for a friendly deal proceed.
Question 6: Under the Uniform Commercial Code (UCC), the 'perfect tender rule' applies to:
- Service contracts over $50,000
- Installment contracts only
- Sales of goods in a single delivery (Correct answer)
- Government procurement contracts
Correct answer: Sales of goods in a single delivery
The UCC perfect tender rule allows a buyer to reject goods if they fail in any respect to conform to the contract, but this applies to single-delivery sales contracts.
Question 7: Which negotiation strategy involves making concessions on lower-priority issues to gain concessions on higher-priority ones?
- Good cop/bad cop
- Logrolling (Correct answer)
- Best alternative to a negotiated agreement (BATNA)
- Principled negotiation
Correct answer: Logrolling
Logrolling involves trading concessions across different issues, giving up less important items in exchange for gains on higher-value priorities.
CCM Contract Management and Negotiation 2
A contractor submits a claim for additional costs due to unforeseen site conditions.
Which contract clause typically governs this situation?