[Jul 15, 2023] L4M3 Exam Dumps - CIPS Practice Test Questions [Q85-Q106]

QUESTION 85
A procurement professional is drafting payment terms for a commercial contract. He is considering about payment method if defective products are found. Which of the following should be embedded in payment terms to control this issue?

Remedies for late payment

Pay-less notice

Invoice preparation

Retention clause

QUESTION 86
Which of the following is the international standard for labelling hazardous substances?

GPS

HSE

CODEX STAN 1-1985

GHS

QUESTION 87
Which of the following can be considered as implied terms in a contract?
1. Case law
2. Statute
3. Trade custom
4. A term can never be implied, it must always be expressed by the parties

1,3 and 4 only

1, 2 and 3 only

1, 2 and 4 only

2, 3 and 4 only

QUESTION 88
In common law, which of the following documents is legally binding without the need for consideration?

One-off contract

Hire purchase agreement

Deed

Blanket order

QUESTION 89
Which of the following are implied terms in sales contracts? Select THREE that apply.

Payment method

Customer satisfaction

Transfer of ownership

Risk transfer

Fitness for purpose

Mode of transportation

QUESTION 90
CMS Corp goes into a gainshare agreement with the contractor, EIP Ltd. Both parties agree that the final fee will be calculated on target cost – target fee basis. Which of the following will affect the final fee payable in this gainshare agreement? Select TWO that apply:

Accrual expense

Final price

Purchaser goodwill

Supplier share

Actual cost

QUESTION 91
Which of the following regulates barriers to the provision of services between countries?

CISG

GATS

ADA

Incoterms

QUESTION 92
A purchase order can become a contract between supplier and purchaser if it is…?

Received by the supplier

Accepted by the supplier

Issued by the buyer

Edited by the supplier

QUESTION 93
Standard terms and conditions should become the governing terms for which group of items?

Leverage items

Bottleneck items

Strategic items

Routine items

QUESTION 94
Which of the following documents are likely to have legal standing? Select TWO that apply:

Quotation

Request for information

Tender

Requisition

Estimate

QUESTION 95
In which of the following section of a specification, requirements for training to use the equipment will be set out?

Performance

Consultation requirements

Implementation

Issue reference

QUESTION 96
Which of the following is most likely to be an one-off contract?

Franchise Agreement

Framework Agreement for supply of mono-crystalline silicon

Contract for construction of a power plant

Commercial lease agreement of an office building

QUESTION 97
Which of the following is always automatically considered as a contract?

Call-off

Framework arrangement

Performance management framework

Framework agreement

QUESTION 98
Cleveland Insurance (Cleveland) offers a range of insurance services. The main software used in the call centre is a customer relationship management (CRM) system. Cleveland perceived an urgent need to replace the existing CRM system to deal with the increasing number of customers and services.
Urgent Digital Ltd (Digital) is one of the bidders of Cleveland’s ITT for designing, building and managing the new CRM system. Its bid team is led by Hank Irvine, its technical director. Hank realises that winning the Cleveland contract (valued at approximately £50M) will enhance his career. During discussions with Cleveland, Hank offers certain assurances regarding timescales for the project. He has not carried out any investigations into the viability of the timescales. Hank has little idea whether the timescales can be met.
Cleveland decides that Digital’s bid meets with its requirements, especially given the assurances in timescale offered by Hank, and decides to proceed with it, subject to a formal contract. Eventually, a formal contract is signed by both parties. The initial assurances given by Hank about the timing of the project are never going to be achieved and are at best grossly exaggerated.
Cleveland brought the case to the court and sought rescission of contract with Digital. Is Cleveland’s claim appropriate in this case?

Yes, because Cleveland needs to seek rescission first before claiming for damages

Yes, because both parties agreed with rescission of their contract

No, because the work had been carried out which could not be returned

No, because the contract does not include any provision on rescission

QUESTION 99
Which of the following are likely to be express terms in a contract?
1. Legislation
2. Custom and practice
3. Contract particulars
4. Terms and conditions

2 and 3 only

1 and 4 only

3 and 4 only

1 and 2 only

QUESTION 100
A retailer prefers to display its best selling products and promotion programme on the building windows. According to rule of contract formation, this act will generally constitute…?

An invitation to treat

A legal capacity

An offer

A mailbox rule

QUESTION 101
Which of the following are true statements about RFQ process? Select TWO that apply.

Buying organisation should only send RFQ to pre-qualified suppliers

RFQ process requires the suppliers to submit their technical proposals

RFQ process creates heavier administrative burdens than tendering process

Price is often the only variable in the RFQ and quotations

RFQ process is not suitable for low value purchase

QUESTION 102
Which of the following statement is true about one-off contract?

Suppliers have many opportunities to improve the quality during the performance of one-off contract

One-off contracts can be used for services and works

Ad-hoc purchase is not a type of one-off purchase

One-off contracts only apply to low-value, low-risk purchase

QUESTION 103
Consequences and actions that arise from certain KPI scores must be…? Select TWO that apply.

Mutually agreed

Deliberately omitted

Documented

Unilaterally imposed by the purchaser

Terminated

QUESTION 104
Which of the following encourages social and environmental criteria in public sector contracting in the UK?

Social Action, Responsibility and Heroism Act

The Public Services Act

Children and Social Work Act

Supply and Appropriation Act

QUESTION 105
GPP, the employer, and Prosolia UK, the contractor, entered into five EPC contracts for the development of five different solar power generation plants in the United Kingdom. Four out of the five developments failed to be commissioned by the relevant due dates, with the delays ranging from 44 to 285 days.
Among other claims, GPP, acting through its two investment vehicles, claimed liquidated damages of £500 per day in all four contracts for Prosolia UK’s failure to achieve completion of the plants by the due date. The liquidated damages claimed amounted to £1,804,221 across the four delayed contracts.
Prosolia, alongside various other defences, raised the defence that the liquidated damages provision in each contract was a penalty, and therefore unenforceable against it. Is Prosolia contractually obliged to make the payment to the plaintiff?

No, the amount claimed is too excessive and it may put Prosolia into insolvency. The clause must be void

No, the clause must be treated as a penalty clause which is unenforceable in UK

Yes, the amount is a reward to the employer as they have supervised and monitored the projects

Yes, the clause is a genuine estimate of possible losses that GPP may have suffered and therefore, it is enforceable.

A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract. The amount of the liquidated damages is supposed to be the parties’ best estimate at the time they sign the contract of the damages that would be caused by a breach. If a breach occurs and the liquidated damages clause is enforceable, the parties do not calculate the actual damages (i.e., how much money a party actually lost as a result of the breach). Instead, the breaching party pays the predetermined sum provided by the liquidated damages provision.
To be enforceable, a liquidated damages clause should meet the following criteria.
Damages are difficult to estimate. A court will be more likely to enforce a liquidated damages provision if the damages that will be incurred as a result of a breach of the contract are difficult to estimate when the contract is entered into. In certain situations, injuries are easy to prove. For example, if a breach will result in the loss of sales, it is easy to determine the actual damages by calculating lost profits. Others are more difficult, like the harm caused by breach of a confidentiality agreement or theft of trade secrets. To be enforceable, the damages should be either uncertain or difficult to quantify at the time the contract is entered into.
The amount is reasonable and not a penalty. If the amount of the liquidated damages is grossly disproportionate to the actual harm incurred, a court will likely find it is a penalty or punishment and will not enforce the provision. When making this analysis, courts usually consider what was reasonable at the time the contract was entered into as opposed to when the breach occurred. There have been cases, however, where courts will decide the reasonableness of the damage estimate based on the actual harm at the time of the breach.
The scenario is excerpted and edited based on a real world case law. In that case, the court held that GPP was entitled to liquidated damages under all four of the EPC contracts, ruling that the provisions did not amount to unenforceable penalties in each of the contracts.
Reference:
– CIPS study guide page 158-159
– Liquidated damages in energy projects
– What Is a Liquidated Damages Provision?
LO 3, AC 3.2

QUESTION 106
Which of the following are the conditions for revocation of offer to be valid?
1. The offeree has not received the offer yet
2. Revocation of offer must be communicated with the offeree
3. Revocation of offer must be sent via email
4. Offeree has not accepted the offer yet

2 and 4 only

1 and 4 only

1 and 3 only

2 and 3 only