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CIPS Managing Contractual Risk Sample Questions (Q48-Q53):

NEW QUESTION # 48
What is the purpose of a liability clause in a contract?

A. to give an approximate pre-determined value of loss
B. to ensure adherence to legal standards
C. to punish the supplier for poor performance
D. to limit commercial and financial exposure

Answer: D

Explanation:
The purpose of liability clauses is "to limit commercial and financial exposure"- this is a direct quote from p.2. Liability is the amount that a company owes to another party- this is why contracts will focus on limiting their liability as much as possible.

NEW QUESTION # 49
An exchange of written documents between a buyer and supplier, each detailing their own Terms and Conditions is known as the Battle of the Forms. Who generally wins the Battle?

A. The party who issued the last document
B. The party who issued the first document
C. The party who commits a breach
D. The party with the greatest liability

Answer: A

Explanation:
The Battle of The forms is won by the party who sends the last form. This is referred to in the study guide as 'the last shot wins'

NEW QUESTION # 50
Parky Parks Ltd has a contract with Slides R Us for the provision of children's playground equipment. The contract contains a clause for liquidated damages and puts the figure at £500k. Which of the following statements is correct? Select TWO

A. Damages under the amount of £500k are not required to be paid to Parky Parks
B. costs incurred above £500k will be covered by Parky Parks Ltd
C. liquidated damages is a genuine estimate of loss
D. Liquidated damages needs to be a 100% accurate figure
E. If damages exceed £500k Parky Parks can apply to the courts to get Slides R Us to pay above this amount

Answer: B,C

Explanation:
The true statements are: liquidated damages is a genuine estimate of loss (it doesn't need to be a 100% accurate figure, so long as it's your best estimate) and costs incurred above £500k will be covered by Parky Parks Ltd. That's one of the disadvantages of stating liquidated damages in a contract for a buyer- if damages total more than this, you have to foot the bill for the rest. See p.30 for more info

NEW QUESTION # 51
Which of the following will you put into box 5?

A. payment terms
B. liability
C. liquidated damages
D. Contract variation

Answer: A

Explanation:
The correct answers are as follows:
L5M3 Latest Exam Vce | L5M3 Exams
This is payment terms - the discussion is about amending the payment terms from 60 days to 30 days.

NEW QUESTION # 52
Harry is negotiating a contract for a new IT system for his business. He is investing heavily in the system and wants the system to be able to provide the services he requires for the next 10 years. However he is aware that technology is changing quickly and would like to include a clause in the contract to ensure that the system he is purchasing is useable for the next 10 years. What should Harry include in the contract?

A. change control
B. benchmarking
C. service credits
D. limitation of liability

Answer: B

Explanation:
Benchmarking should be included- this is common in long-term contracts where variables can af-fect the market over time. By including benchmarking, harry gets assurance that the product he purchases will meet the market expectations over the next 10 years. The other answers are incorrect; 1- there is no mention of liability in the question so this is incorrect. 2- service credits would be used if he is concerned the product would be offline/ not perform (it's a form of damages) but this isn't the case in this scenario. He's not worried about underperformance, he's worried about obsolescence. 4- change control is for when there are multiple versions of a contract due to amendments being made.

NEW QUESTION # 53
......

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L5M3 Latest Exam Vce | L5M3 Exams

L5M3 Latest Exam Vce - Free PDF Quiz 2023 L5M3: First-grade Managing Contractual Risk Exams

CIPS Managing Contractual Risk Sample Questions (Q48-Q53):

L5M3 Latest Exam Vce Exam Latest Release | Updated L5M3: Managing Contractual Risk

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