Test Online Free CIPS L5M3 Exam Questions and Answers
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Kranky Kat Ltd has just been through an adjudication process with a supplier it worked with who committed a breach in the contract. Kranky Kat is not happy with the outcome of the adjudication, what can Kranky Kat do?
Answer: Explanation:
If you're not happy with the decision of an adjudication you can appeal the decision. So option 2 is correct. If the appeal is turned down then unfortunately there's not much more you can do as adjudication is binding and legally enforceable. See p. 143 for more info on adjudication
Question 17Selectable Answer
A warranty is a minor term of a contract. Is this TRUE?
Answer: Explanation:
The correct answer is 1. The statement is True so the answer needs to start with 'yes'.
Therefore options 3 and 4 should be discounted. Option 2 is incorrect a warranty does NOT affect the prime benefit of the contract. See p. 126 for more details on Contractual Warranties and Conditions
Question 18Selectable Answer
Fruity McFruitFace is an exporter of fruit.
Which of the following payment terms would be most advantageous for it?
Answer: Explanation:
Exporters prefer advance payment - this puts the risk with the importer / buyer. There's a table of these four terms on p.36. An importer would prefer an open account arrangements. The other two options are in the middle and the risk is more equally split between the two parties.
Question 19Selectable Answer
Which of the following will you put into box 5?
Answer: Explanation:
The correct answers are as follows:
Table
Description automatically generated
This is a condition as it is fundamental to the contract.
Question 20Selectable Answer
Fishfingers Ltd has a contract with a supplier of cod. When the contract was set up it was not known how important specific delivery times would be for the arrival of the fish. After several months it has now become apparent that delivering the fish within 3 hours of them being caught is fundamental to the contract as delayed delivery results in poorer quality Fish Fingers.
When the contract was set up what was the delivery times?
Answer: Explanation:
An Innominate Term is the correct answer. At the time the contract was written, we didn't know how important the delivery time was - therefore it wasn't a condition or a warranty- it was an innominate term. An innominate term is a term that is difficult to classify at the time of drafting a contract. A time is of the essence clause would be a good thing to include in this contract now that we know how important the delivery times are. For more information on Conditions, Warranties and Innominate Terms see p. 43
Question 21Selectable Answer
George is a procurement manager at a manufacturing company and is reviewing a contract he has with a supplier. He notes that there are multiple appendices to the contract and there is no Precedence of Documents.
What does this mean for the contract?
Answer: Explanation:
Where there's no order of precedence, it is assumed that all documents have equal significance. This is a direct quote from the study guide p.15
Question 22Selectable Answer
John is a chocolatier and has a big order of Easter Eggs coming up in April. He also creates chocolates to sell all year round in his shop, but Easter Eggs represent a large proportion of his profits each year. John's chocolate making machine has just broken and he has ordered a new one to be delivered in February. However due to a delay, the manufacturer of the new machine can't deliver until May.
What course of action can John take?
Answer: Explanation:
3 is the correct answer. This question is testing your understanding of 'consequential loss' which is explained on p.109. Consequential loss is where you can claim damages for incidental loss (loss that isn't a direct cause of the breach of the contract, such as future earnings). In this scenario the breach is the late delivery and the incidental damage is John not being able to sell any chocolate in his shop or make his Easter Eggs. There are questions like this in the real exam- remember to think what the textbook would say and don't overthink this. The scenario doesn't always give you a lot of information (for example
this doesn't say if there is a contract in place) so think- which of these four options is the most logical and what is this question trying to test me on.
Question 23Selectable Answer
Which of the following will you put into box 1?
Answer: Explanation:
The correct answers are as follows:
Table
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This is an anticipatory breach as the breach hasn't happened yet- it's about what will happen to the future summer order.
Question 24Selectable Answer
Which of the following will you put into box 1?
Answer: Explanation:
The correct answers are as follows:
Table
Description automatically generated
This is consequential loss. Brian Air is going to lose the profits from the sales of the flights it had sold. Now those flights won't go ahead Brian Air can claim for consequential loss which would help balance the books
