What are the four required elements discussed in class that make up a valid, enforceable contract?
Offer, Acceptance, Consideration, and Legal Subject Matter/Competent Parties
What are the three general elements of a contract identified on p. 539?
Introduction (identifies parties), Clauses (conditions agreed to), and Schedules/Appendices (details behind clauses)
What topics need to be verified to ensure a contract is appropriate?
What is being bought and cost, shipping/delivery terms, installation (if applicable), acceptance criteria, warranties, remedies/liquidated damages, and boilerplate/dispute resolution mechanisms
What is an “integration clause” in a contract? Where is it typically located?
A clause stating the written contract is the complete and final agreement, superseding prior oral/written agreements. It is typically located near the end of the contract.
What is a “firm fixed price contract” and when is it used? Who bears the most risk?
A contract where the price is set and does not change regardless of market conditions. Used for straightforward purchases with predictable costs. Supplier bears the most risk if costs rise; buyer bears risk if market prices fall
What is a “time and materials” contract and when is it used?
A contract based on agreed hourly labor rates plus overhead/profit, used when costs cannot be determined upfront (e.g., maintenance/repair work). Includes a “not to exceed” amount.
What is the difference between a “spot contract” and a “short-term contract”?
- Spot contract: One-time, nonrecurring purchase.
- Short-term contract: Routine purchases over a limited time horizon.
What are the advantages and disadvantages of using a “long-term” contract?
- Advantages: Assurance of supply, access to supplier technology, cost/price info, volume leverage, better supplier planning.
- Disadvantages: Supplier opportunism, wrong supplier selection, volume uncertainty, foregone opportunities, buyer unreasonableness.
Scope of Agreement clause
Defines the boundaries of what the contract covers (products, services, responsibilities)
Evergreen clause
Automatically renews the contract unless terminated; ensures continuity but can lock parties in.
Supply and Delivery clause
Specifies delivery terms, schedules, and responsibilities for logistics.
Payment clause
Defines payment terms, timing, and currency
Penalty or Liquidated Damages clause
Specifies consequences for late performance or breach, often monetary.
Liability clause
Assigns responsibility for damages, losses, or claims.
Force Majeure clause
Excuses performance under uncontrollable circumstances (natural disasters, strikes)
Termination clause (with or without cause)
Defines conditions under which contract may be ended early
Intellectual Property clause
Establishes ownership of IP created or shared under the contract
Confidentiality clause
Protects sensitive information from disclosure
Governing Law clause
States which jurisdiction’s laws apply to the contract
Notices clause
Specifies how official communications must be delivered between parties
Definitions clause
Clarifies meanings of key terms used in the contract.
What is the difference between a national contract, a corporate agreement, and an open-ended agreement?
- National contract: Applies across a country, often with standardized terms.
- Corporate agreement: Applies across an entire corporation, covering multiple divisions.
- Open-ended agreement: No fixed end date; continues until terminated.
What is the difference between an open-ended order and a blanket order?
- Open-ended order: Allows purchases without a set quantity or end date.
- Blanket order: Covers a set quantity or dollar amount over time, with releases against it.
What is the difference between arbitration and mediation? What is the result of each?
- Arbitration: Binding decision by an impartial third party.
- Mediation: Non-binding facilitation by a third party to encourage compromise.
