Contract Law & Commercial Transactions Flashcards

Which statute-based rule covers the federal government's acquisition process and its contract clauses?

Answer: Federal Acquisition Regulation (FAR)

The FAR is the principal regulation governing federal acquisitions and standard contract clauses.

A contract 'change order' under a changes clause lets the government do what?

Answer: Unilaterally make changes within the general scope of the contract

The changes clause allows the government to make unilateral changes within the contract's general scope, with an equitable adjustment.

What is 'novation' in a contractual context?

Answer: Substituting a new party for an original party with the other party's consent

Novation replaces one party with another, with the consent of all parties, releasing the original party.

Why must a classified contract's proposal-stage information be handled carefully even before award?

Answer: Classified or proprietary information may be involved, so security requirements may apply during solicitation

Solicitations and proposals may include classified or proprietary data, so safeguarding obligations apply before award.

Which best describes a 'time-and-materials' contract?

Answer: Payment based on direct labor hours at fixed rates plus materials cost

T&M contracts pay fixed hourly rates for labor plus actual material costs.

Under contract law, what does 'consideration' mean?

Answer: Something of value exchanged by each party

Consideration is the bargained-for exchange of value that makes promises enforceable.

Which situation most likely makes a contract voidable?

Answer: One party entered based on a material misrepresentation

Material misrepresentation, duress, or fraud can make a contract voidable by the injured party.