Question No : 1
Lisa has a contract with an internet provider and the contract stated the need for Wi-Fi to be online 100% of the time. The Wi-Fi has only been available 97% of the time. In order for
Lisa to claim compensation from her internet provider, which of the following would need to be present in the contract?

• A.change control
• B.liability clause
• C.service credits
• D.subcontracting

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Answer:
Explanation:
This would be service credits. If this is present and the contract stated 100% online access-Lisa could claim 3% of her money back. See p.112 for information on service credits

Question No : 2
Franky B's is a popular restaurant chain which is seeking a resolution to a conflict it has with its supplier of Fried Chicken. It is looking for a dispute resolution that does not involve the court but in which an expert third party will make a binding decision.
Which is the most suitable dispute resolution method for Franky B's?

• A.litigation
• B.adjudication
• C.conciliation
• D.mediation

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Answer:
Explanation:
This is Adjudication. The other answers are incorrect- litigation involves the court. Conciliation and mediation do not provide binding decisions. P. 143

Question No : 3
Conciliation differs from mediation in which of the following ways?

• A.mediation is voluntary and conciliation is mandatory
• B.mediation is cheaper than conciliation
• C.the outcome of mediation is not binding and the outcome of conciliation is binding
• D.the mediator has no decision making power but a conciliator can provide recommen-dations

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Answer:
Explanation:
The true statement is 'the mediator has no decision making power but a conciliator can provide recommendations'. The other statements are false; both processes are voluntary, cheap and non-binding.

Question No : 4
Which of the following will you put into box 1?

• A.compete
• B.avoid
• C.compromise
• D.collaborate

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Answer:
Explanation:
The correct answers are as follows:



The answer is compromise as they're seeking a solution that will satisy everyone.

Question No : 5
1.A breach of representation by party A in a contract would allow party B to do what?

• A.rescind the contract
• B.claim damages
• C.rescind the contract and claim damages
• D.nothing - this is not a fundamental breach

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Answer:
Explanation:
A breach of representation is a major/ fundamental breach and allows the innocent party to rescind the contract and claim damages. A Breach of Representation is when you provide false information about who you are- this might have been a fundamental reason as to why the contract went ahead. If it turns out not to be true, the other party has the right to cancel the contract and claim damages. See p.126

Question No : 6
Which of the following will you put into box 1?

• A.subcontracting
• B.reputational damage
• C.penalty clause
• D.consequential loss

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Answer:
Explanation:
The correct answers are as follows:



Table
Description automatically generated
Subcontracting is the correct answer as they're using another company to fulfil the contract

Question No : 7
Which of the following would constitute an offer? Select TWO:

• A.a display in a shop window
• B.an advert on a website
• C.an auction
• D.a bid on an auction
• E.a price proposal that is valid for 14 days

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Answer:
Explanation:
Offers include bids on an auction and a price proposal that is valid for 14 days. The other three options are Invitations to Treat. See p.3 for the full list of what constitutes an Invitation to Treat. The tricky thing here is that an auction is an invitation to treat but a bid on an auction is an offer. An auction is an ITT because you're encouraging people to make an offer to you. A bid on the auction is the offer (you offer to buy something at a price you propose).

Question No : 8
Mark is a consultant who works with building managers and advises them on how to make their buildings safer.
What type of insurance should Mark have?

• A.Public Liability
• B.Product Liability
• C.Professional Indemnity
• D.Property Insurance

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Answer:
Explanation:
Mark needs professional indemnity insurance. Types of insurance is a known exam topic and the study guide does not cover this particularly well. Types of insurance is mentioned on p.25 but Pro-fessional Indemnity Insurance isn't really explained and this does come up in the exam. Professional Indemnity Insurance is needed when your job is to give advice to people (like as a Consultant). It's used for if the advice you give turns out to be bad. For example, if Mark told the building manager he should get ABC Fire Alarm installed, and actually this Fire Alarm doesn't meet the necessary Health and Safety standards, he could get sued by the building manager. He could then claim on his Professional Indemnity Insurance.

Question No : 9
GoGo Ltd has contracted Reny Manufacturing to produce a bespoke piece of equipment for them. It is an asset and costs a significant amount of money. A contract is drawn up which states that GoGo Ltd has the right to terminate the contract at any time for any reason. Halfway through production of the asset, GoGo Ltd calls Reny Manufacturing to cancel the order. Reny Manufacturing has incurred many costs already. Can GoGo Ltd cancel the order?

• A.yes- the order has not yet been delivered meaning that GoGo Ltd can cancel- there has been no transfer of ownership
• B.no- Reny Manufacturing will sue for damages
• C.yes- there is a termination clause in the contract
• D.no- the termination clause is unfair

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Answer:
Explanation:
The correct answer is 3 - 'yes there is a termination clause in the contract'. In this scenario it would be immoral for GoGo Ltd to cancel, but it wouldn't be illegal. They have the right to use the clause that's been put into the contract. It's possible that Reny might sue for damages, but this doesn't prevent GoGo Ltd from cancelling the order (they might be okay with paying the damages). There is a very similar question to this in the exam. Termination clauses are discussed on p.134 - I recommend brushing up on this topic before the exam.

Question No : 10
Sarah is a baker and orders free-range eggs from a local supplier which she uses to make cakes. There is a contract in place which included a specification that states that the eggs must be free-range. One day the supplier delivers eggs which Sarah uses in the cakes.
Later she dis-covered that these were not free-range. Sarah believes that the supplier has broken the con-tract. Is this true?

• A.Yes- this is a breach of a condition
• B.Yes- this is a fundamental breach
• C.no- the specification is not a contract document
• D.no - there has been a breach in a warranty

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Answer:
Explanation:
"No- there has been a breach in warranty" is the correct answer. The key to answering this question lies in the fact that the specification in this example is a warranty rather than a condition of the contract. P.45 of the study guide explains that the Sale of Goods Act has implications on whether or not a specification is a condition, warranty or innominate term and it's all about whether the product is in 'good condition' and can be used for its intended purpose. In this example the eggs were used for their intended purpose and were in good condition (or Sarah wouldn't have put them in the cakes). Therefore in this example, the eggs needing to be free-range is a warranty of the contract not a condition. Therefore options A and B are both wrong. Answer C is also wrong because the question mentioned that the specification was included in the contract. If you want to know more about the implication of the Sale of Goods act on specifications see p.45.