Real CIPS L4M3 Exam Questions – Help You Pass Commercial Contracting Exam Successfully

1. In a contract, both buyer and supplier agreed the lead time is 3 days. The contract also requires that any variation must be made in writing. Then the buyer places an order by phone call and requests delivery the next day, but the supplier delivers on the third day since the order.

Can buyer refuse to pay as supplier did not deliver per time?

2. Which of the following may be a benefit for purchaser in using call off contract?

3. An organization has a normal tender process that often last 1 month from defining the needs to contract award. Manufacturing department suddenly required a new special part that they could not foresee within a month.

Which of the following should be the priority actions of procurement manager in this urgent situation? Select TWO that apply:

4. Which of the following are examples of incentives which can be embedded in contract terms? Select THREE that apply

5. 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. 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.

Hank’s pre-contractual assurance is most likely to be an example of which of the following?

6. Southwark is negotiating a contract with Orchard to provide software and IT services. Orchard will manufacture and install the products which are contractually supplied by IBM. Southwark’s procurement manager is worried that during the contract there would be some problems that they would not able to claim for damages from Orchard.

Which of the following should be included in the head contract so that Southward can sue IBM, should the need arise?

7. Required safety level

8. A construction company often subcontracts approximately 50% of the project works because of unpredictable customer's demand. Although larger corporate customers require quick response to RFQ, the time lapse between tender bid submission and contract commencement is usually long.

Which of the following arrangement would benefit both the contractor and customer?

9. The model form contract invented by Institute of Civil Engineers is...?

10. Which of the following is the procedure that makes no further competition under a framework agreement?

11. Non-disclosure

12. Under English law's general legal principles of contract formation, which of the following are likely to be offers? Select TWO that apply.

13. Under a framework agreement, which of the following are supplier selection mechanisms? Select TWO that apply:

14. Which of the following is used to detail the complex matter that may be verbiage to the main document?

15. Technical and physical characteristics of the product

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

17. Blakenall District Hospital (BDH) is a large hospital that is a major part of the government’s health service. Purchasing staff are in the habit of placing many long-term contracts with suppliers and sub-contractors. Whilst these contracts are usually carried out successfully, prices are often paid that are well over budget. The purchasing manager is concerned to find that, in some cases, members of staff are forcing suppliers to accept fixed price contracts. The policy has caused several problems such as some suppliers refusing to deal with BDH and a few going out of business mid-way through performing a contract with BDH. This is due to fluctuating market prices of materials. The procurement manager suggests supplier to adopt variable pricing arrangement with price index.

Is this a right course of action?

18. A term can never be implied, it must always be expressed by the parties

19. A purchase order can become a contract between supplier and purchaser if it is...?

20. Which of the following are likely to be advantages of using invitation to tender? Select TWO that apply:

21. 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:

22. Which of the following is the set of principles that enables courts to determine exactly what the written contract says and what that must mean, then the court will uphold that?

23. Which of the following should be specially noticed in market dialogue with suppliers in specification development?

24. According to mailbox rule in some common law countries, at which point the offeree's acceptance will be effective?

25. Which of the following is always an advantage of using fixed price arrangement in a contract for buying organisation?

26. Which of the following should be taken to avoid the conflicts between orally negotiated terms before the conclusion of contract and the final written contract?

27. Governance

28. Which of the following is the model form of contract for construction which is recommended by World Bank?

29. The pricing arrangement in which markup is added into cost base to calculate the final price is known as...?

30. Which of the following will be always automatically deemed as a consideration?

31. OTIF deliveries

32. Which of the following is the best definition of consideration in contract law?

33. The pricing arrangement in which markup is added into cost base to calculate the final price is known as...?

34. Which of the following statements is true about model form of contract?

35. Which of the following regulates barriers to the trade of goods between Member States of WTO?

36. Which of the following is set down in statute as a liability that exists without any need to prove fault?

37. Royal Naval Hospital at Rockstown, Anyport manages a fleet of nine ambulance vehicles. During busy periods, it becomes very difficult to keep track of the location of each ambulance (and the nature of their journey). Continual problems lead to the proposal for a new control system (ERNS).

For this ERNS project, the procurement department has drafted a specification in which only a bullet point list of basic requirements was written down. The procurement manager understands that the specification should be developed more specifically but a cross functional team from the Hospital could not do that. A senior buyer suggests that some of Hospital's pre-qualified suppliers could support them in developing the specification.

Which of the following should be a priority approach of procurement department in developing dialogue with those suppliers about specification development?

38. Bethy sees a coat on shop window with a $100 price tag. She comes and asks the shop owner to buy it. The owner states that the price has not been updated and the current price for the coat is $120. Bethy says the owner should honour the quoted price on window shop. Is Bethy correct?

39. Which of the following are reasons why a purchaser wants to embed a subcontracting clause into the main contract? Select TWO that apply:

40. In which of the following conditions, request for quotation produces the best results?

41. When a contract has been agreed on the basis of a fraudulent misrepresentation, which of the following remedies are available?

42. Southwark is negotiating a contract with Orchard to provide software and IT services. Orchard will manufacture and install the products which are contractually supplied by IBM. Southwark’s procurement manager is worried that during the contract there would be some problems that they would not able to claim for damages from Orchard.

Which of the following should be included in the head contract so that Southward can sue IBM, should the need arise?

43. According to rule of contract formation, which of the following is a valid acceptance?

44. Which of the following is used to detail the complex matter that may be verbiage to the main document?

45. Which of the following is a key feature of liquidated damage clauses?

46. To check whether supplier actually complies with the labour standards set out in the contract, the purchaser should have...?

47. Which of the following is the international standard for labelling hazardous substances?

48. Under hire purchase agreement, when will the ownership of asset legally belong to the purchaser?

49. Is the government only source of industrial standards within a country?

50. Which of the following are most likely to be substantive elements of the specification of a truck? Select TWO that apply:

51. 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?

52. Offeree has not accepted the offer yet

53. Express terms in a contract are stated in which of the following? Select TWO that apply