L5M3 MANAGING CONTRACTUAL RISKS: SAMPLE QUESTIONS AND ANSWERS
1. What is a force majeure clause in a contract?
Answer: A force majeure clause is a contractual provision that excuses one or both
parties from performing their obligations under the contract in the event of
circumstances beyond their control, such as acts of God, natural disasters, or political
unrest.
2. How can you minimize risks associated with contractual performance?
Answer: You can minimize risks associated with contractual performance by carefully
drafting the contract, clearly defining the obligations of each party, including
performance metrics and remedies for non-performance.
3. What are the main types of risks in a contract?
Answer: The main types of risks in a contract include performance risks, financial
risks, legal risks, and reputation risks.
4. What is a liquidated damages clause?
Answer: A liquidated damages clause is a contractual provision that establishes the
amount of damages that one party must pay to the other in the event of a breach of
contract.
5. What is a limitation of liability clause?
Answer: A limitation of liability clause is a contractual provision that limits the liability
of one or both parties in the event of a breach of contract.
6. How can you ensure compliance with contractual obligations?
Answer: You can ensure compliance with contractual obligations by monitoring
performance, conducting audits, and providing training to employees involved in the
contract.
7. What is a breach of contract?
Answer: A breach of contract occurs when one party fails to perform its obligations
under the contract.
8. How can you mitigate financial risks in a contract?
Answer: You can mitigate financial risks in a contract by requiring a performance
bond or letter of credit, establishing payment milestones, and including
indemnification clauses.
9. What is an indemnification clause?
Answer: An indemnification clause is a contractual provision that requires one party
to compensate the other party for losses or damages arising from the contract.
10. What is a warranty in a contract?
Answer: A warranty is a contractual provision that guarantees that the product or
service provided will meet certain specifications or standards.
11. What is a dispute resolution clause?
Answer: A dispute resolution clause is a contractual provision that outlines the
process for resolving disputes between the parties, such as mediation or arbitration.
12. What is a non-compete clause?
Answer: A non-compete clause is a contractual provision that prohibits one party
from competing with the other party for a specified period of time.
1. What is a force majeure clause in a contract?
Answer: A force majeure clause is a contractual provision that excuses one or both
parties from performing their obligations under the contract in the event of
circumstances beyond their control, such as acts of God, natural disasters, or political
unrest.
2. How can you minimize risks associated with contractual performance?
Answer: You can minimize risks associated with contractual performance by carefully
drafting the contract, clearly defining the obligations of each party, including
performance metrics and remedies for non-performance.
3. What are the main types of risks in a contract?
Answer: The main types of risks in a contract include performance risks, financial
risks, legal risks, and reputation risks.
4. What is a liquidated damages clause?
Answer: A liquidated damages clause is a contractual provision that establishes the
amount of damages that one party must pay to the other in the event of a breach of
contract.
5. What is a limitation of liability clause?
Answer: A limitation of liability clause is a contractual provision that limits the liability
of one or both parties in the event of a breach of contract.
6. How can you ensure compliance with contractual obligations?
Answer: You can ensure compliance with contractual obligations by monitoring
performance, conducting audits, and providing training to employees involved in the
contract.
7. What is a breach of contract?
Answer: A breach of contract occurs when one party fails to perform its obligations
under the contract.
8. How can you mitigate financial risks in a contract?
Answer: You can mitigate financial risks in a contract by requiring a performance
bond or letter of credit, establishing payment milestones, and including
indemnification clauses.
9. What is an indemnification clause?
Answer: An indemnification clause is a contractual provision that requires one party
to compensate the other party for losses or damages arising from the contract.
10. What is a warranty in a contract?
Answer: A warranty is a contractual provision that guarantees that the product or
service provided will meet certain specifications or standards.
11. What is a dispute resolution clause?
Answer: A dispute resolution clause is a contractual provision that outlines the
process for resolving disputes between the parties, such as mediation or arbitration.
12. What is a non-compete clause?
Answer: A non-compete clause is a contractual provision that prohibits one party
from competing with the other party for a specified period of time.
