NCMA CPCM 1.2 Contract Principles Exam Questions and Answers

NCMA CPCM 1.2 Contract Principles Exam Questions and Answers Principal and Agency -Answer-Relationship in which one person has legal authority to act for another. Authority granting party (company or government) is the principal. Party who receives authority to act on their behalf is the agency. Four types of authority -Answer-Actual authority, express authority, implied authority, apparent authority Actual Authority -Answer-Agent's specific authority that the principal intentionally confers on the agent. It confers a power to the agent to affect legal relations or the principals with third persons. Express Authority -Answer-Authority plainly granted, either verbally or in writing, to an agent by a principal. It is direction provided to the agent by the principal to do specific actions. Implied Authority -Answer-Authority given by a principal to an agent that is not actually expressed or otherwise communicated. Apparent Authority -Answer-The appearance of being a principal's agent with the power to act for the principal. Corporations are liable for an employees acts and promises to a third party if it appears to the employee has been granted authority. Contract -Answer-A promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Four elements of a contract -Answer-Offer/acceptance, consideration, legal purpose, capacity. Inspection -Answer-Examining and/or testing supplies and services to determine I the supplies and services meet the contract's requirements. Acceptance -Answer-Occurs when the buyer inspects the goods to conform to the contract's requirements or fails to reject the delivery. Risk of loss -Answer-Contracting parties need to establish who bears the risk of loss under certain circumstances. The party who has title to the goods when the loss occurs has o impact on liability for risk of loss. Repudiation -Answer-Occurs when one contracting party gives the other party reason to believe that they will not perform the contract through an action or statement. When this occurs, the other part may then pursue a remedy against the other party for breach of contract. Termination-Commercial -Answer-May be terminated for case if one party breaches the contract such as nonperformance by the seller or nonpayment by the buyer. May also be terminated by mutual agreement. Termination-Government -Answer-Only the government may terminate for convenience or default. Convenience termination is unique to this situation only. Actual Authority -Answer-Power that the principal intentionally confers on the agent or allows the agent to believe he or she possesses. Can be expressed or implied. Agency -Answer-A relationship that exists when there is a delegation of authority to perform all acts connected within a particular trade, business, or company. It gives authority to the agent to act in all matters relating to th