NCMA CPCM 1.2 Contract Principles

Mutual Mistake

A mistake is a belief that is not in accord with the facts. If the government participated in the mistake, relief is sought by he contractors.

Fiduciary

A person who handles another person' money or property in a capacity that involves confidence or trust. Guardians for example.

Contract

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.

Agency

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 the business of the principal.

Show cause letter

A written delinquency notice informing a contractor of failure to perform within the specified terms of the contract, and advising that the government is considering termination by default. Afford the contractor the opportunity to show why it should not be terminated.

Change order

A written order signed by the contracting officer of buyer, authorize by contract clause, to modify contractual requirements within the scope of contract.

Termination

Action taken pursuant to a contract clause in which the contract officer unilaterally ends all or part of the work.

Four types of authority

Actual authority, express authority, implied authority, apparent authority

Default

Actual or anticipated failure of a contractor to fulfill the terms and conditions of a contract. Gives contractor right to terminate the contract.

Actual Authority

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.

Forbearance

An intentional failure of a party to enforce a contract requirement, usually done for an act of immediate or future consideration from the other party. It is sometimes referred to as a "nonwaiver" or "one-time waiver" but not as a relinquishment of rights.

Principal

An officer, director, or person having primary management or supervisory responsibilities within a business entity.

Voidable contract

An otherwise valid contract that may be legally avoided, cancelled, or annulled at the option of one of the parties.

Termination Claim

Any claim or demand by a prime contractor for compensation because of the termination before completion of any contract or subcontract for the convenience of the government.

Consideration

Anything of value that changes hand between two parties to a contract. The thing of value that must change hands between the parties to a contract.

Implied Authority

Authority given by a principal to an agent that is not actually expressed or otherwise communicated.

Express Authority

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.

General Provisions

Collection of contract clauses that are not specific to a given procurement, but are a part of a common contract language.

Mutual Assent

Consists of an offer made by one party and the unconditional acceptance of that offer by another party.

Risk of loss

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.

Excusable delay

Contractual provision designed to protect the contractor from sanctions for late performance.

Inspection

Examining and/or testing supplies and services to determine I the supplies and services meet the contract's requirements.

Breach of contract

Failure without the legal excuse to perform any promise that forms the whole or part of a contract.

Implied Acceptance

In the case of a bilateral agreement, acceptance of an offer need not be expressed, but it may be shown by any words or acts indicating the offeree's assent to the proposed bargain.

Contract fulfillment

Joint buyer/seller actions taken to successfully perform and administer a contractual agreement and meet or exceed all contractual obligations and timely contract closeout.

Four basic concepts of Market Strategy

Market segmentation, market positioning, market entry, marketing mix

Termination-Commercial

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.

Boilerplate

Name used for printed terms and conditions frequently used on purchase orders

Repudiation

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.

Acceptance

Occurs when the buyer inspects the goods to conform to the contract's requirements or fails to reject the delivery.

Five stages of contract formation

Offer/acceptance, consideration, competent parties, legal subject matter, mutuality agreement

Four elements of a contract

Offer/acceptance, consideration, legal purpose, capacity.

Repudiation

One party refuses to perform the contract requirement, duty, or obligation owed to the other party.

Termination for convenience

Only in government contracting. Government has unilateral right to terminate a contract for convenience when the contract no longer serves the best interests of the government. Occur as a result of significant events that were not foreseen before the contract.

Contracting officer

Only person with the authority to obligate government funds or to enter/administer agreements.

Termination-Government

Only the government may terminate for convenience or default. Convenience termination is unique to this situation only.

Agency authority

Power delegated by a principal to his or her agent, a right to exercise power.

Actual Authority

Power that the principal intentionally confers on the agent or allows the agent to believe he or she possesses. Can be expressed or implied.

Principal and Agency

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.

Discharge of a contract

Results when the obligations incurred by the parties when they entered into the agreement are excused and the parties are no longer bound to perform as promised.

Clause

Term or condition used in contracts.

Termination for default

Terminate a contract as a result of the contractor not performing according to the terms of the contract.

Apparent Authority

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.

Anticipatory repudiation

When the contractor (supplier), without justification, makes a positive statement to the government (buyer) that it will not perform its contractual duties.

Executed contract

Written document signed by both parties and mailed or otherwise furnished to each party, which expresses the requirements, terms and conditions to be met by both parties in the performance of the contract.

Bilateral modification

contractual change that is signed by the contractor and the contracting officer. Use to make equitable adjustments resulting from a change notice, definitize letter contracts, or reflect other agreements of the parties modifying the terms of contracts.