CLP Royalty Auditing & Contract Management Flashcards
6 cards from real CLP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CLP Royalty Auditing & Contract Management flashcards as text
When a licensee transfers its business assets to a new owner, what license contract provision governs whether the license survives the transfer?
Answer: Assignment and change-of-control clause
The assignment and change-of-control clause specifies whether the license may be transferred to a new owner and under what conditions, protecting the licensor from unwanted counterparties.
What is a 'license maintenance fee,' and how does it differ from a running royalty?
Answer: A periodic flat fee to keep the license active, independent of sales activity, unlike a running royalty tied to revenue
A maintenance fee is a periodic fixed payment ensuring the license remains active regardless of whether the licensee is actively selling, providing the licensor a guaranteed income stream.
A 'most-favored nation' (MFN) clause in a license agreement regarding royalty rates means:
Answer: If the licensor later grants a lower royalty rate to another licensee in comparable circumstances, the existing licensee is entitled to that lower rate
An MFN royalty clause ensures the existing licensee benefits from any better rate the licensor offers to others, preventing the licensor from discriminating after signing.
What is the significance of a 'cure period' in a license termination clause?
Answer: It gives the breaching party a defined time to remedy a default before termination becomes effective
A cure period (typically 30–90 days) allows a party in breach to fix the problem—such as a late royalty payment—before the other party can terminate the agreement.
Under contract management best practices, when should a licensor send a royalty reminder notice?
Answer: Before the royalty report due date, typically 2–4 weeks in advance, to ensure timely submission
Proactive reminder notices before due dates reduce late payments, demonstrate active management, and create a record that supports any subsequent default or termination claim.
What is a 'survival clause' in a licensing agreement?
Answer: A provision specifying which obligations (e.g., confidentiality, indemnification, audit rights) remain enforceable after the agreement expires or is terminated
A survival clause identifies obligations that outlast the agreement's termination, such as confidentiality duties or the right to audit records for the final royalty period.