CPCM Certified Professional Contract Manager: Contract Law and Legal Frameworks 3 — Questions and Answers
Question 1: In federal procurement, what statute governs disputes between contractors and the government after contract award?
- The Competition in Contracting Act
- The Contract Disputes Act of 1978 (Correct answer)
- The Federal Acquisition Streamlining Act
- The Truth in Negotiations Act
Correct answer: The Contract Disputes Act of 1978
The Contract Disputes Act of 1978 (41 U.S.C. §§7101-7109) establishes the mandatory process for resolving claims between contractors and executive agencies.
Question 2: The 'battle of the forms' under UCC §2-207 applies when:
- Two parties negotiate verbally with conflicting terms
- An acceptance or confirmation contains additional or different terms from the offer (Correct answer)
- A court must choose between two competing contracts for the same goods
- A buyer and seller use identical standard forms
Correct answer: An acceptance or confirmation contains additional or different terms from the offer
UCC §2-207 addresses the common commercial situation where an acceptance or written confirmation includes terms that differ from those in the original offer.
Question 3: Which principle limits a non-breaching party's recovery to losses that were foreseeable at the time of contract formation?
- Mitigation of damages
- The Hadley v. Baxendale rule (Correct answer)
- Specific performance doctrine
- The economic loss rule
Correct answer: The Hadley v. Baxendale rule
The rule from Hadley v. Baxendale (1854) limits consequential damages to those arising naturally from the breach or reasonably contemplated by both parties at contract formation.
Question 4: A contract clause requiring disputes to be submitted to an arbitrator rather than a court is enforceable under which federal statute?
- The Administrative Procedure Act
- The Federal Arbitration Act (Correct answer)
- The Alternative Dispute Resolution Act of 1998
- The Uniform Arbitration Act
Correct answer: The Federal Arbitration Act
The Federal Arbitration Act (9 U.S.C. §§1-16) declares arbitration agreements valid and enforceable and requires courts to stay litigation in favor of arbitration when a valid clause exists.
Question 5: What is the primary distinction between a 'waiver' and a 'modification' in contract law?
- A waiver requires new consideration while a modification does not
- A modification requires new consideration while a waiver is a voluntary relinquishment without consideration (Correct answer)
- Waivers must be in writing while modifications can be oral
- A modification is unilateral while a waiver is bilateral
Correct answer: A modification requires new consideration while a waiver is a voluntary relinquishment without consideration
A modification changes contract terms and generally requires new consideration under common law, while a waiver is a voluntary, unilateral relinquishment of a known right that requires no consideration.
Question 6: Under CISG (UN Convention on Contracts for the International Sale of Goods), when does risk of loss pass to the buyer for goods involving carriage?
- When the buyer pays the invoice
- When the goods are handed to the first carrier (Correct answer)
- When the goods arrive at the buyer's facility
- When the seller ships the invoice
Correct answer: When the goods are handed to the first carrier
CISG Article 67 provides that risk passes to the buyer when the goods are handed to the first carrier, unless the seller is required to hand them over at a specific place.
Question 7: Which equitable remedy compels a party to perform their specific contractual obligation rather than pay damages?
- Rescission
- Restitution
- Specific performance (Correct answer)
- Reformation
Correct answer: Specific performance
Specific performance is an equitable remedy ordered when monetary damages are inadequate, most commonly in contracts involving unique goods, real property, or rare items.
CPCM Certified Professional Contract Manager: Contract Law and Legal Frameworks 3
In federal procurement, what statute governs disputes between contractors and the government after contract award?