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CIPS L5M3 Managing Contractual Risk Exam Practice Test

Demo: 18 questions
Total 120 questions

Managing Contractual Risk Questions and Answers

Question 1

If a party is to 'repudiate' a contract, what does this mean?

Options:

A.

the party is cancelling the contract as it is no longer needed

B.

the party is using the break-clause to end the contract

C.

the party indicates they no longer intend to fulfil their contractual obligations, usually in response to a breach

D.

the party gives notice that they anticipate that they will not be able to fulfil their future obligations

Question 2

Which of the following will you put into box 1?

Options:

A.

compete

B.

avoid

C.

compromise

D.

collaborate

Question 3

Which of the following would constitute an offer? Select TWO:

Options:

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

Question 4

Which of the following would not be considered acceptance of a contract term?

Options:

A.

silence

B.

accepting a delivery of a product into the factory

C.

an invoice

D.

a handshake

Question 5

What is a boilerplate clause?

Options:

A.

the clause that will take precedent if there are conflicting pieces of information within a contract

B.

a type of warranty

C.

a clause that allows the contract to be modified if both parties are in agreement

D.

a set of clauses that are commercially standard and expected in all contracts

Question 6

Penguin Ltd has a contract with Blue Company. Blue Company has just broken a warranty in the contract. What remedies does Penguin Ltd have available?

Options:

A.

they can sue and claim damages

B.

they can claim damages and terminate the contract

C.

they can terminate the contract but cannot claim damages

D.

they can claim damages but not terminate the contract

Question 7

What is the purpose of a limitation on liability clause?

Options:

A.

it provides an accurate pre-estimate of potential loss

B.

it caps a company's exposure to risk

C.

it allows a party to claim on insurance if something goes wrong

D.

it passes the responsibility to the other party

Question 8

Robert has a contract with Farmer Ted who provides his manufacturing firm with potatoes. There is a contract in place, signed by both parties that Ted will deliver 2 tonnes of potatoes per week. Due to changes in demand, Robert would like Ted to start providing 3 tonnes of potatoes every three weeks. What must be in place for this change to occur?

Options:

A.

a variation clause and a new liquidated damage fee

B.

a variation clause and a signed agreement by both parties

C.

a notification of change and adequate compensation

D.

a notification of change and indemnity

Question 9

Which of the following will you put into box 8?

Options:

A.

Condition

B.

Warranty

C.

Innominate Term

Question 10

Which of the following are advantages to seeking a solution to conflict via litigation?

Options:

A.

the process provides certainty that an outcome will be reached

B.

There is no confidentiality

C.

The decision can be made by someone who isn't an expert in their field.

D.

The process is quick and cost-effective

Question 11

Which of the following situations would be considered a minor breach of a contract? Select TWO:

Options:

A.

a painter is contracted to paint a room white but paints it magnolia as there was no white paint available

B.

a consultant has given bad advice

C.

a zoo orders three baby lions and is given three baby tigers

D.

a supplier has breached a non-disclosure agreement

E.

A supplier delivers a lorry-load of produce six hours late due to a burst tyre.

Question 12

Which of the following will you put into box 6?

Options:

A.

Mediation

B.

Arbitration

C.

Litigation

D.

Negotiation

Question 13

When there has been a major breach in a contract, the contract will be terminated. Is this statement true?

Options:

A.

yes- the contract will be terminated and damages sought

B.

yes- the contract must be terminated as there is no means by which the contract could continue after a major breach

C.

no- the contract can be affirmed by the injured party

D.

no- the contract can continue if the offending party proves that further breaches won't occur

Question 14

Tyrone Enterprises has just come out of a meeting with one of its suppliers Bob. The meeting has not gone well and the contract has become frustrated. What does this mean?

Options:

A.

Negotiations between the buyer and supplier have failed and dispute resolution will need to take place

B.

the supplier has committed a major breach and is unable to fulfil the contract

C.

a situation has occurred which means that the contract can no longer be performed

D.

The buyer no longer requires the supplier but is tied into the contract

Question 15

Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required. What action can Verity Fashion take?

Options:

A.

sue for damages as the flip flops have already been made and this incurred costs

B.

nothing- there is no written contract in place

C.

subcontract the manufacturing of the flipflops to a third party

D.

claim on insurance

Question 16

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?

Options:

A.

change control

B.

liability clause

C.

service credits

D.

subcontracting

Question 17

When considering consequential loss, can a cap be placed on the amount claimed?

Options:

A.

yes- this is known as a limitation of liability clause

B.

yes- this is known as a pre-estimate of damages

C.

no- there can be no cap to either direct loss or consequential loss

D.

no- there can be a cap to direct loss but not to consequential loss

Question 18

Which of the following statements about 'Specific Performance' are TRUE? Select TWO.

Options:

A.

Orders for Specific Performance can be a lengthy and costly process

B.

Orders for Specific Performance can be a cheap and quick way to remedy a breach in contract

C.

If a party is ordered to complete a 'Specific Performance' and doesn't, they can be ar-rested

D.

The innocent party must mitigate all losses

Demo: 18 questions
Total 120 questions