CPCM Certified Professional Contract Manager: Contract Law and Legal Frameworks 5 — Questions and Answers
Question 1: Under the False Claims Act (31 U.S.C. §§3729-3733), a contractor who knowingly submits a false claim to the government faces civil penalties of:
- Up to $1,000 per false claim
- Between $13,000 and $27,000 per false claim plus treble damages (Correct answer)
- Forfeiture of the contract only
- Criminal prosecution exclusively
Correct answer: Between $13,000 and $27,000 per false claim plus treble damages
The False Claims Act imposes per-claim civil penalties (adjusted periodically for inflation, approximately $13,000–$27,000) plus three times the government's actual damages.
Question 2: Which doctrine permits a party to enforce a promise even without consideration when the promisor should have reasonably expected detrimental reliance?
- Accord and satisfaction
- Promissory estoppel (Correct answer)
- Unjust enrichment
- Economic duress
Correct answer: Promissory estoppel
Promissory estoppel (Restatement §90) substitutes detrimental reliance for consideration when a clear promise induces reasonably foreseeable action or forbearance by the promisee.
Question 3: A subcontract contains a 'pay-when-paid' clause. Under most U.S. court interpretations, this clause:
- Permanently excuses the prime contractor from paying the subcontractor
- Creates a timing mechanism but does not transfer the risk of owner non-payment to the subcontractor (Correct answer)
- Is void against public policy in all states
- Requires the subcontractor to wait indefinitely for payment
Correct answer: Creates a timing mechanism but does not transfer the risk of owner non-payment to the subcontractor
Most courts interpret pay-when-paid clauses as setting a timing condition, not a condition precedent, so the prime contractor must pay within a reasonable time regardless of owner payment.
Question 4: What is the statute of limitations for a contractor to file a claim under the Contract Disputes Act against the federal government?
- 1 year from the accrual of the claim
- 3 years from contract completion
- 6 years from the accrual of the claim (Correct answer)
- 10 years from contract award
Correct answer: 6 years from the accrual of the claim
The Contract Disputes Act (41 U.S.C. §7103(a)(4)(A)) requires contractors to submit claims within 6 years after the claim accrues, i.e., when all events giving rise to the claim are known or should be known.
Question 5: A contract clause that liquidates damages at a set amount per day of delay is enforceable if:
- The amount is approved by a government agency
- The stipulated sum is a reasonable estimate of anticipated damages and actual damages are difficult to ascertain (Correct answer)
- The clause is limited to 10% of total contract value
- Both parties agree in writing after the delay occurs
Correct answer: The stipulated sum is a reasonable estimate of anticipated damages and actual damages are difficult to ascertain
Liquidated damages clauses are enforceable when they represent a reasonable pre-estimate of harm and actual damages would be difficult to calculate, distinguishing them from unenforceable penalties.
Question 6: Under federal contract law, an 'anti-assignment' clause in a contract generally:
- Is superseded by the Assignment of Claims Act for monetary claims (Correct answer)
- Permanently prevents any transfer of contract rights or duties
- Only applies to subcontracting arrangements
- Requires congressional approval to override
Correct answer: Is superseded by the Assignment of Claims Act for monetary claims
The Assignment of Claims Act (31 U.S.C. §3727) allows contractors to assign monetary claims to financial institutions notwithstanding anti-assignment clauses in federal contracts.
Question 7: In contract formation, what is required for a valid acceptance under the mirror image rule applied in common law contracts?
- The acceptance must be received within a commercially reasonable time
- The acceptance must match the offer's terms exactly without variation (Correct answer)
- The acceptance must be in writing regardless of the offer's form
- The acceptance must include consideration to be binding
Correct answer: The acceptance must match the offer's terms exactly without variation
The common law mirror image rule requires that an acceptance match the offer's terms precisely; any variation constitutes a rejection and counteroffer rather than a valid acceptance.
CPCM Certified Professional Contract Manager: Contract Law and Legal Frameworks 5
Under the False Claims Act (31 U.S.C. §§3729-3733), a contractor who knowingly submits a false claim to the government faces civil penalties of: