Which challenge is commonly associated with Agile methods?

Agile methods prioritize flexibility, iterative development, and responsiveness to change, which can create challenges when aligned with traditional legal contract definitions. In many cases, contract terms are established based on fixed requirements and deliverables, which can conflict with Agile's adaptive nature. Contracts that require a clear scope at the outset can stifle the iterative and evolving process that Agile embracing. Therefore, the inability to fit Agile's principles within traditional contract frameworks often proves to be a significant challenge that teams must navigate.

The other options present concepts that are generally not aligned with Agile principles. Agile encourages collaboration and adapts to changes rather than adhering strictly to predefined methodologies (the first choice). It also values working software and team communication over excessive documentation (the third choice), meaning that overemphasis on documentation is contrary to Agile practices. Additionally, while co-located teams can enhance collaboration, Agile does not necessitate that all team members be in the same location, and many Agile teams function effectively in distributed settings.