Project Management Professional (PMP) Exam Practice – Question1851

You are working on a project that management has decided to terminate early, because the product was rendered obsolete by the introduction of new technology by a competitor. You have awarded a contract for part of the project that will be terminated, and
fortunately have a clause that enables you to terminate it for convenience at any time. This means that______________


A.
Your contractual obligations are complete once you issue the termination for convenience
B. You may need to compensate the seller for seller preparations and for any completed or accepted work
C. You need to compensate the seller only for accepted work that was completed prior to the termination order
D. Specific rights and responsibilities are determined once the termination order is issued

Correct Answer: B

Explanation:

Explanation:
Early termination of a contract is a special case of procurement closure. The rights and responsibilities of the parties are contained in a termination clause of the contract. Typically such a clause allows the buyer to terminate the whole contract or a portion of it for
cause or convenience at any time. In doing so, the buyer may need to compensate the seller for seller’s preparations and for any completed and accepted work related to the terminated part of the contract.