Understanding Contract Language: 'Specifies' vs. 'Specific'

The correct answer is:

c. specifies

The sentence should be: 'The contract specifies that a penalty fee is to be paid if the work is late.'

'Specific' is an adjective, while 'specify' is a verb. In this sentence, we need the verb form in the third person singular to match the subject 'contract.' The correct form to use is 'specifies'.