A _____ Contract Should Be Used in Cases Where the Parties

question 51

Multiple Choice

A _____ contract should be used in cases where the parties cannot accurately predict labor or material costs and quantities to be used prior to the execution of the purchase agreement.

• A)fixed-price with escalation
• B)firm fixed price
• C)cost sharing
• D)cost-based
• E)fixed-price with redetermination

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Definitions:

Catchall Category

A broad classification used to group items or concepts that do not fit neatly into other categories.

Instruments

Formal legal or financial documents that represent some monetary value or agreement, including notes, bonds, contracts, and deeds.

Commodity Contracts

Legal agreements to buy or sell a particular commodity at a predetermined price at a specified time in the future.

Certificates of Deposit

Financial instruments offered by banks that provide an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.