Certified Professional Public Buyer (CPPB) Practice Test

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Which clause allows one party to cancel a contract due to non-performance by the other party?

Termination for convenience
Termination for default
Termination for breach
Termination without cause

The correct answer is: Termination for default

The clause that permits one party to cancel a contract due to non-performance by the other party is commonly referred to as Termination for Default. This clause is instrumental in contractual agreements, as it outlines the conditions under which a party may consider the contract breached due to the other party's failure to meet its obligations. When non-performance occurs—such as failure to deliver goods or services as promised, or failure to adhere to timelines—the injured party can invoke this clause to terminate the contract. The purpose of this mechanism is to protect the interests of the party that is fulfilling its obligations, allowing it to seek recourse or an exit from the agreement when the other party does not perform as required. In contrast, other clauses like Termination for Convenience and Termination without Cause typically enable a party to end the contract for reasons other than non-performance, such as strategic business decisions or changes in circumstances, rather than a failure of contractual obligations. Termination for Breach may also seem relevant, but it is more of a general term that encompasses various forms of breaches, while Termination for Default specifically addresses non-performance.