CPCM Certified Professional Contract Manager: Negotiation and Conflict Resolution in Contracts 4

Question 1

Which type of arbitration clause requires parties to resolve disputes through arbitration and waives the right to a jury trial?

Accepted Answer

Mandatory binding arbitration clause

Answer

Mandatory binding arbitration clauses make arbitration the exclusive and final dispute resolution method, eliminating court litigation.

Question 2

The ZOPA (Zone of Possible Agreement) exists when:

Accepted Answer

The seller's reservation price is below the buyer's reservation price

Answer

A ZOPA exists when there is overlap between what the buyer is willing to pay and what the seller is willing to accept.

Question 3

A contract includes a 'time is of the essence' clause. What is the legal effect if the contractor delivers one day late?

Accepted Answer

The delay constitutes a material breach, entitling the owner to terminate

Answer

When time is of the essence, any delay—even minor—can be treated as a material breach allowing termination.

Question 4

In a principled negotiation framework, which of the following represents an 'objective criterion' for resolving price disputes?

Accepted Answer

Published market indices or independent appraisals

Answer

Objective criteria are external, independent standards that both parties can accept as fair benchmarks.

Question 5

Which contract type places the GREATEST financial risk on the government (buyer) in a dispute over cost overruns?

Accepted Answer

Cost-plus-fixed-fee (CPFF)

Answer

Under CPFF contracts, the government reimburses all allowable costs plus a fixed fee, absorbing virtually all cost risk.

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