Practice Quiz

CLEP Principles of Management Exam Prep

Category - Procurement Management

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What is a material breach?
  1. Major contract violation
  2. Using a material other than what was agreed in the contract
  3. Making a payment a week late
  4. A type of incentive
  5. A form of retainage
Explanation
Answer: a - A material breach is a large violation of a contract agreement. It is one large enough to trigger actions such as termination of the project, a penalty fee or legal action. We don’t believe paying late by a week would be a material breach, so the only other option that fits. Using a material other than one agreed could be a major violation of the contract.

Key Take Away: A material breach must result in penalties. This should be agreed early in the contracting process and reviewed with lawyers.
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