CAPM (Certified Associate in Project Management) Practice Exam

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Study for the CAPM Test. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What is a contract?

A non-binding agreement between two parties
A binding agreement between a buyer and seller
An informal handshake deal
A document only used in government procurement

The correct answer is: A binding agreement between a buyer and seller

A contract is a binding agreement between a buyer and seller. This means that both parties are legally obligated to fulfill their agreed-upon terms and conditions. Contracts are essential in project management to ensure all parties involved understand their roles, responsibilities, and the scope of work. Option A is incorrect because a contract is a binding agreement, not a non-binding one. Option C is incorrect because an informal handshake deal is not a legally binding contract. Contracts need to be documented and signed to be enforceable. Option D is incorrect because contracts are not exclusively used in government procurement; they are utilized in various industries for different types of agreements.