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GSLC · Question #118

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…

The correct answer is B. It depends on what the termination clause of the contract stipulates. Contract termination and payment obligations are governed by the specific terms of the signed contract, particularly the termination clause. The answer depends entirely on what the contract stipulates regarding early or convenience termination.

Risk Management & Compliance

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 termination clause of the contract stipulates.
  • CIt depends on what the outcome of a lawsuit will determine.
  • DNo, the ZAS Corporation did not complete all of the work.

How the community answered

(59 responses)
  • A
    17% (10)
  • B
    73% (43)
  • C
    3% (2)
  • D
    7% (4)

Why each option

Contract termination and payment obligations are governed by the specific terms of the signed contract, particularly the termination clause. The answer depends entirely on what the contract stipulates regarding early or convenience termination.

AYes, the ZAS Corporation did not choose to terminate the contract work.

While ZAS did not initiate the termination, this fact alone is not the legal basis for payment - the contract terms are the definitive authority on what compensation is owed.

BIt depends on what the termination clause of the contract stipulates.Correct

The termination clause of a contract defines the rights and obligations of both parties upon early termination, including whether payment is owed for partial work completed. In project procurement management, contracts typically include termination for convenience clauses that specify proportional compensation for work already performed, making the contract the authoritative source for resolving payment liability.

CIt depends on what the outcome of a lawsuit will determine.

A lawsuit is a last-resort dispute resolution mechanism, not the primary determinant of payment liability, which is first established by the contract's own language.

DNo, the ZAS Corporation did not complete all of the work.

Incomplete work does not automatically void payment obligations, as most contracts allow proportional compensation for partial completion under termination for convenience clauses.

Concept tested: Contract termination clauses and payment obligations in procurement

Source: https://www.pmi.org/pmbok-guide-standards/foundational/pmbok

Topics

#contract termination#procurement#legal liability#vendor management

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