Free Practice Questions for CIPS L4M3 Exam

Indexation and price adjustment clauses are appropriate when future costs are uncertain or likely to change, such as regulatory-driven wage increases (B) or fluctuating material costs (E). These clauses allow adjustments based on objective indices while preserving the integrity of the contract.

SFO issued an RFQ with defined terms and condition and detailed specification. This RFQ can be considered as an invitation to treat. Vogon's quotation is an answer to the purchaser's RFQ and is an offer to SFO. The contract come to life at the time Vogon received the notification from SFO senior management.

The strike may be a force majeur event, depending on the contract particular clauses and jurisdiction. In common law countries, force majeur is applicable as an exclusion of liability only if the contract allows it. In many civil law countries, force majeur is an implied term. But in every jurisdiction, force majeur is only a reason for excluding liability for non-performance of a contract. In other words, the non-performance party is not liable for any breach if force majeur event occurs but the event does not exclude the breach.

LO 1, AC 1.2

A well-drafted service specification includes a clear description of the services to be delivered, fault rectification timelines, and the duration of service. These define scope, performance expectations, and timelines. Evaluation methodology and contract terms are important, but they are part of separate procurement or contractual documentation.

The key features, advantages and disadvantages of standard terms are summarised below:

- Form: Concise, generic and designed to be attached to purchase or sales orders

- Non-negotiable

- Ineffective terms: may be replaced by implied terms or national legal code rules, or subject to court 'balance of interest' judgement.

- Advantages: Basic contractual protection for most common circumstances; Avoid having to create new contract for repeat business.

- User friendly

- Usage: Low value, low risk, repetitive transactions

- Coverage: Definitions, relationship to other contracts, formation of the contract, order of precedence, price, invoicing and payment, specification, legal compliance, warrantee and liability, ownership and risk, intellectual property, data management and ethics.

- Disadvantages: Does not allow for specific circumstances; Risk for creating battle of the forms; Can create contractual uncertainty if used with purchase orders under call-off contracts.

A verbal contract is generally enforceable in law, provided that it contains all the necessary elements of a valid contract: offer, acceptance, consideration, intention to create legal relations, and capacity. However, certain types of contracts (e.g., for land) may require written form under the Statute of Frauds. Evidence and clarity are the challenges, not enforceability.

Service credits are financial compensations provided to the buyer when the supplier fails to meet the agreed-upon service levels outlined in the SLA. They serve as a remedy for underperformance. Service guarantees are commitments to meet certain standards, service standards define the expected level of service, and service schedules outline the timing of service delivery, but none directly compensate the buyer for service failures.

Early market engagement is encouraged in procurement best practices. It helps procurement teams understand new technologies, identify capable suppliers, and inform the development of effective specifications and contract terms. However, it must be non-binding and conducted fairly to ensure no supplier gains an unfair advantage.

A false statement that induces a party to enter a contract constitutes misrepresentation. This provides the misled party with remedies that may include rescission (cancellation of the contract) and, depending on the type of misrepresentation (fraudulent, negligent), possibly damages as well.