Certified Professional Public Buyer (CPPB) Practice Test

If a contract permits, what is likely the next step if a project is pushed back due to a recession?

1. Termination for cause

2. Termination for convenience

3. Declare force majeure and terminate the contract

4. Suspend the contract until funds are available

The correct answer is: Termination for convenience

In the context of a contract that permits certain actions due to external circumstances like a recession, the option of termination for convenience is particularly beneficial for both parties involved. This provision allows one party, typically the buyer or public agency, to terminate the contract without cause, should they find it necessary due to budget constraints or changes in project priorities prompted by the economic situation. Termination for convenience does not assign fault and therefore maintains a professional relationship between the parties, which can be crucial for future contracts or dealings. In a recession, funding may become limited, and extending the contract under the current terms may not be feasible. By opting for termination for convenience, the buyer can effectively manage resources without the need for justifying the decision to terminate based on fault or performance issues, which can be contentious and complicated. Other options, while sometimes valid in their own contexts, may not align with the general practices encouraged in public procurement during economically challenging times. For example, termination for cause would require proving that one party breached the contract, which may not be appropriate or justifiable. Declaring force majeure generally applies to unforeseen events that prevent contract fulfillment and might not be directly related to economic downturns. Suspending the contract until funds are available might not be permitted if the contract does