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Home > CIPS > CIPS Level 5 Advanced Diploma in Procurement and Supply > L5M3

L5M3 Managing Contractual Risk Question and Answers

Question # 4

Which of these is NOT a stage in negotiation?

A.

proposal

B.

agreement

C.

bargaining

D.

adjourning

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Question # 5

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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Question # 6

Which of the following will you put into box 6?

A.

Mediation

B.

Arbitration

C.

Litigation

D.

Negotiation

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Question # 7

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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Question # 8

Which of the following is not a way in which a contract can end?

A.

performance

B.

agreement

C.

litigation

D.

breach

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Question # 9

A buyer and supplier have a contract and the supplier has committed a major breach. However, as they are the sole supplier to the buyer, the buyer has decided not to terminate the contract and instead to work with the supplier to remedy the situation. What is this called?

A.

affirmation of the contract

B.

conflict resolution

C.

awarding damages

D.

assigning liability

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Question # 10

Which of the following will you put into box 5?

A.

liability

B.

payment terms

C.

liquidated damages

D.

Contract variation

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Question # 11

Which of the following is not a form of ADR (Alternative Dispute Resolution)?

A.

mediation

B.

negotiation

C.

arbitration

D.

conciliation

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Question # 12

Which of the following will you put into box 7?

A.

Mediation

B.

Arbitration

C.

Litigation

D.

Negotiation

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Question # 13

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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Question # 14

Which of the following processes is the most adversarial?

A.

mediation

B.

litigation

C.

adjudication

D.

negotiation

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Question # 15

Perry is seeking a resolution to a conflict he has with his supplier. He wants a third party to make a binding and legally enforceable decision and wants the issue to remain confidential. He is considering litigation. Is this the best solution for Perry?

A.

yes- litigation is the most appropriate for his requirements

B.

no- Perry should try mediation

C.

no- Perry should try Adjudication

D.

no - Perry should try Conciliation

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Question # 16

A breach which is so severe that it goes to the root of the contract is known as what?

A.

fundamental breach

B.

condition breach

C.

major breach

D.

essence breach

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Question # 17

John has signed a document with Larry that says that he will give Larry his car. Both John and Larry are over the age of 18 and are of sound mind. Larry accepts this offer and signs the document. Is this a contract?

A.

yes- it has been signed

B.

yes- both parties consent and have capacity to do so

C.

no- there is no consideration

D.

no- this document is an invitation to treat

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Question # 18

Which of the following will you put into box 1?

A.

Payment Term

B.

Time is of the Essence

C.

Subcontracting

D.

Specification

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