CISSP-ISSMP · Question #97
Eric is the project manager of the NQQ Project and has hired the ZAS Corporation to complete part of the project work for Eric's organization. Due to a change request the ZAS Corporation is no longer
The correct answer is C. It depends on what the termination clause of the contract stipulates.. When a contract is terminated for the convenience of the buyer (not due to the vendor's failure), payment obligations are governed by the termination clause within the contract itself. Most contracts include termination-for-convenience clauses that specify what compensation the t
Question
Eric is the project manager of the NQQ Project and has hired the ZAS Corporation to complete part of the project work for Eric's organization. Due to a change request the ZAS Corporation is no longer needed on the project even though they have completed nearly all of the project work. Is Eric's organization liable to pay the ZAS Corporation for the work they have completed so far on the project?
Options
- AYes, the ZAS Corporation did not choose to terminate the contract work.
- BIt depends on what the outcome of a lawsuit will determine.
- CIt depends on what the termination clause of the contract stipulates.
- DNo, the ZAS Corporation did not complete all of the work.
How the community answered
(33 responses)- A18% (6)
- B9% (3)
- C70% (23)
- D3% (1)
Explanation
When a contract is terminated for the convenience of the buyer (not due to the vendor's failure), payment obligations are governed by the termination clause within the contract itself. Most contracts include termination-for-convenience clauses that specify what compensation the terminated party is entitled to - typically payment for work completed and allowable costs incurred. Without reviewing the specific termination clause, no definitive answer about liability can be given. Simply not completing all the work does not automatically eliminate the vendor's right to payment, and resolving it through a lawsuit is not the primary step - the contract terms come first.
Topics
Community Discussion
No community discussion yet for this question.