Which statement about advance agreements is true?

The correct statement regarding advance agreements is that they must be in writing and incorporated into contracts. This ensures that both parties have a clear understanding of the terms and conditions that govern their agreement. Written documentation is crucial in contract management because it provides legal certainty and serves as a point of reference in case disputes arise. Additionally, incorporating these agreements into contracts formalizes the arrangements, making them enforceable under law.

Advance agreements typically address specific terms related to contract performance, compliance, or other operational requirements. The requirement for them to be documented helps prevent misunderstandings and miscommunications, ensuring transparency and accountability.

Other statements do not align with established practices. For instance, some may suggest that advance agreements can be negotiated only after a contract is signed, but this overlooks the proactive nature of negotiations that can occur before finalizing the contract. Additionally, the idea that they can be implied and need not be documented undermines the importance of legal clarity and defined expectations in contractual relationships. Lastly, restricting advance agreements to contracts exceeding $1 million does not reflect the broader applicability that can exist across various contract sizes and types.