CCNP Contract Law & Regulatory Compliance 2 — Questions and Answers
Question 1: Under the Uniform Commercial Code (UCC), which article primarily governs the sale of goods in commercial contracts?
- Article 1
- Article 2 (Correct answer)
- Article 4
- Article 9
Correct answer: Article 2
UCC Article 2 governs contracts for the sale of goods, distinguishing them from service contracts governed by common law.
Question 2: A contract clause that excuses a party's performance due to an unforeseeable event beyond their control is known as a:
- Indemnification clause
- Force majeure clause (Correct answer)
- Liquidated damages clause
- Choice of law clause
Correct answer: Force majeure clause
A force majeure clause relieves a party of liability for non-performance caused by extraordinary events outside their reasonable control.
Question 3: Which federal regulation requires government contractors to maintain an adequate cost accounting system for contracts exceeding certain thresholds?
- Federal Acquisition Regulation (FAR)
- Cost Accounting Standards (CAS) (Correct answer)
- Truth in Negotiations Act (TINA)
- Defense Contract Audit Agency (DCAA) guidelines
Correct answer: Cost Accounting Standards (CAS)
Cost Accounting Standards (CAS) require covered contractors to disclose, follow, and consistently apply cost accounting practices on government contracts.
Question 4: In contract law, the parol evidence rule generally prevents introduction of prior oral agreements when:
- The contract contains ambiguous terms
- The written contract is fully integrated (Correct answer)
- One party claims fraudulent inducement
- The agreement involves real property
Correct answer: The written contract is fully integrated
The parol evidence rule bars extrinsic evidence to contradict or modify a fully integrated written contract.
Question 5: A contractor who knowingly submits a false claim to the federal government may be liable under which statute?
- Sarbanes-Oxley Act
- False Claims Act (Correct answer)
- Anti-Kickback Act
- Foreign Corrupt Practices Act
Correct answer: False Claims Act
The False Claims Act imposes civil and criminal liability on those who defraud governmental programs, including treble damages and per-claim penalties.
Question 6: Which contract formation doctrine holds that courts will not enforce agreements where the terms are so one-sided as to be oppressive to one party?
- Frustration of purpose
- Unconscionability (Correct answer)
- Mutual mistake
- Duress
Correct answer: Unconscionability
Unconscionability allows courts to refuse enforcement of contracts that are procedurally or substantively unfair at the time of formation.
Question 7: Under GDPR requirements applicable to US companies handling EU data, a Data Processing Agreement (DPA) is required when:
- Two independent controllers share data
- A controller engages a processor to handle personal data on its behalf (Correct answer)
- Personal data is transferred between US states
- Employees access company databases remotely
Correct answer: A controller engages a processor to handle personal data on its behalf
GDPR Article 28 mandates a DPA between a data controller and any processor that handles personal data on the controller's behalf.
CCNP Contract Law & Regulatory Compliance 2
Under the Uniform Commercial Code (UCC), which article primarily governs the sale of goods in commercial contracts?