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Contracting & Negotiation Techniques Flashcards

7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Contracting & Negotiation Techniques flashcards as text

  1. A buyer needs a supplier to start work immediately, but the scope and final cost cannot yet be defined. Which contract type best fits this situation?

    Answer: Time-and-materials contract

    Time-and-materials contracts let work begin when scope and duration are uncertain, though they need close monitoring and a ceiling price.

  2. Under a cost-plus-percentage-of-cost arrangement, what is the main risk to the buyer?

    Answer: The seller's profit rises as costs rise, which removes any reason to control costs

    Because the fee grows with costs, the seller has no incentive to control spending, so U.S. federal procurement prohibits this contract type.

  3. A buyer wants to buy all of a plant's needs for a commodity from one supplier for a year, but the exact quantities are unknown. Which contract fits best?

    Answer: Requirements contract

    A requirements contract obligates the buyer to purchase all of its actual needs from the supplier during the term, without fixing quantities in advance.

  4. Which element is NOT required to form a legally enforceable contract?

    Answer: A notarized signature

    Valid contracts require offer, acceptance, consideration, capacity and a lawful purpose, but notarization is generally not required.

  5. Under UCC Article 2, a contract for the sale of goods priced at $500 or more generally must be:

    Answer: In writing and signed by the party against whom enforcement is sought

    The UCC statute of frauds (§2-201) requires a signed writing for sales of goods of $500 or more, with some exceptions.

  6. In a fixed-price incentive contract with a target cost of $100,000, a target profit of $10,000 and a 70/30 buyer/seller share ratio, actual costs come in at $90,000. What is the seller's profit?

    Answer: $13,000

    The $10,000 underrun is shared 30% to the seller, adding $3,000 to the $10,000 target profit for $13,000 total.

  7. Under the UCC, what is a 'firm offer'?

    Answer: A signed written offer from a merchant promising to keep it open, which cannot be revoked for up to three months even without consideration

    Under UCC §2-205, a merchant's signed written assurance to hold an offer open is irrevocable for the stated time, up to three months.