Supply Chain Management Professional (SCMP) · Question
When negotiating a contract, what does 'force majeure' typically refer to?
A force majeure clause protects parties from liability when they cannot fulfill contract obligations due to uncontrollable, unforeseeable events.
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Question: When negotiating a contract, what does 'force majeure' typically refer to?
Answer options:
- A clause allowing for early termination by either party. ✅ Unforeseeable circumstances that prevent contract fulfillment.
- A penalty for late delivery of goods or services.
- A guaranteed price adjustment mechanism.
Correct answer: Unforeseeable circumstances that prevent contract fulfillment.
Explanation: A force majeure clause protects parties from liability when they cannot fulfill contract obligations due to uncontrollable, unforeseeable events.
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