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Question # 4

RL Corporation are developing a specification for a new piece of equipment. They have no prior experience of procuring the item. The procurement manager wants to understand the benefits and risks of conducting market dialogue to help inform the procurement strategy. Which of the following are three potential advantages of market dialogue? Select THREE that apply.

A.

There is no need to conduct a full procurement process

B.

More collaborative supplier relationships can be developed

C.

Organisations can clarify and optimise the requirements

D.

The procurement process becomes significantly quicker

E.

Purchasers can gauge market interest and competition

F.

Market dialogue is risk-free as there is no contract or agreement

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Question # 5

Which of the following would be steps in the preparation of an invitation to tender? Select TWO that apply.

A.

Re-writing a model form contract

B.

Creating a detailed specification

C.

Learning International Standards

D.

Advertising the requirement

E.

Publishing your company's financial reports

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Question # 6

As part of a long-term contract, a buyer may wish to use separate service level agreements (SLAs). If the targets are not met, which of the following options would compensate the purchaser?

A.

Service guarantees

B.

Service credits

C.

Service standards

D.

Service schedules

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Question # 7

Which of the following are advantages of using a model form contract in negotiations between buyer and seller?

These contracts can save time in negotiations

Each contract is approved by the courts

These contracts are appropriate for all complexities

The contracts are well-known to both parties

A.

1 and 2

B.

2 and 3

C.

3 and 4

D.

1 and 4

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Question # 8

SFO procurement manager sent a request for quotation to Vogon International in which he determined the contract terms and specification. In SFO's standard terms and conditions, it is stated that 'Goods shall be delivered and Services performed by the applicable Delivery Date. Supplier must notify Buyer 3 days prior to the Delivery Date if Supplier is likely to be unable to meet a Delivery Date.'

Vogon replied with a quotation without any amendment to SFO's terms & conditions. The SFO procurement manager found the prices were reasonable and submitted to senior management. Senior management team accepted that quotation and sent a notification to Vogon. On the Delivery Date, Vogon said they had no capacity to supply the product as the quotation due to a workers' strike. Did Vogon breach any agreement with SFO?

A.

No, because Vogon had no intention to be bound by the quotation, therefore, it didn’t constitute a contract

B.

No, because the strike is a force majeur event, so Vogon did not breach any contract with SFO

C.

Yes, because the contract was formed since Vogon had sent the quotation as an acceptance to SFO’s offer

D.

Yes, because the contract had been formed between SFO and Vogon with the quotation as an offer and the notification as an acceptance

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Question # 9

Under English law's general legal principles of contract formation, which of the following are likely to be offers? Select TWO that apply.

A.

Invitation to tender

B.

Quotation

C.

Purchase order

D.

Advertisement

E.

Catalogue

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Question # 10

Which of the following are always considered as minimum preconditions for a contract? Select TWO that apply:

A.

Specification

B.

Promise

C.

Omission

D.

Consideration

E.

Intention to be bound

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Question # 11

Royal Naval Hospital at Rockstown, Anyport manages a fleet of nine ambulance vehicles. During busy periods, it becomes very difficult to keep track of the location of each ambulance (and the nature of their journey). Continual problems lead to the proposal for a new control system (ERNS).

For this ERNS project, the procurement department has drafted a specification in which only a bullet point list of basic requirements was written down. The procurement manager understands that the specification should be developed more specifically but a cross functional team from the Hospital could not do that. A senior buyer suggests that some of Hospital's pre-qualified suppliers could support them in developing the specification.

Which of the following should be a priority approach of procurement department in developing dialogue with those suppliers about specification development?

A.

Internal discussion

B.

General networking

C.

One-to-one meeting with the suppliers

D.

Request for quotation from the suppliers

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Question # 12

Which of the following should be applied when measuring frequency of on-time deliveries during a contract period?

A.

Qualitative assessment

B.

Numerical measure

C.

Binary measure

D.

Subjective measure

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Question # 13

Michelle contacts Hannah and asks her if she would be interested in purchasing her car for £2000. Hannah immediately takes £2000 to Michelle and says she wants to buy the car. Michelle subsequently refuses to proceed. Has the contract between Michelle and Hannah been made?

A.

No, because Michelle has rejected Hannah's offer on buying the car

B.

Yes, because both parties have full legal capability to enter into a contract

C.

Yes, by her performance Hannah has accepted Michelle's offer on selling the car

D.

No, because by refusing to proceed, Michelle rejects Hannah's counter-offer

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Question # 14

In which scenarios would it be appropriate for a procurement organisation to include contractual indexation and/or price adjustment formulae clauses in a services contract? Select TWO that apply.

A.

The supplier’s directors shall be paid dividends during the term

B.

The supplier’s contract staffing costs will be subject to regulatory increase

C.

The material components were tendered as fixed costs for the term

D.

The supplier’s preference is to switch to a more expensive material specification

E.

The market rates for the supplier's material costs will vary during the term

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Question # 15

An organization has a normal tender process that often last 1 month from defining the needs to contract award. Manufacturing department suddenly required a new special part that they could not foresee within a month. Which of the following should be the priority actions of procurement manager in this urgent situation? Select TWO that apply:

A.

Design new specification

B.

Develop relationships with potential suppliers

C.

Review contract performance

D.

Get high-level authority approval

E.

Submit full business justification

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Question # 16

Which of the following contracts would be best suited to a ‘variable pricing’ arrangement?

A.

A contract for window cleaning during the next three months

B.

A contract for road building estimated to take five years to complete

C.

A contract for the supply of 100 printing machines to be delivered next month

D.

A contract for the supply of lubricating oil for immediate delivery

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Question # 17

A senior procurement specialist in UK is preparing a specification in which ISO standards are used to send to global suppliers. Is this action appropriate?

A.

No, the procurement specialist must use BSI standards instead

B.

Yes, evert specification must have ISO standards

C.

Yes, ISO standards are globally recognisable

D.

No, ISO standards are unfamiliar to global suppliers

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Question # 18

A procurement professional is preparing a sale & purchase contract of a machinery. Which of the following clauses should be added to the contract? Select TWO that apply

A.

Supplier selection mechanism

B.

Insurance requirements

C.

Period of hire

D.

Ratio decidendi

E.

Guarantees

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Question # 19

Which of the following is set down in statute as a liability that exists without any need to prove fault?

A.

Strict liability

B.

Current liability

C.

Contingent liability

D.

Non-current liability

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Question # 20

Which of the following statement is true about insurance?

A.

An insurance policy can be mechanism of substance to back up indemnity

B.

The supplier must always pay the insurance premium for goods-in-transit

C.

An insurance policy transfers the legal liabilities from the insured to the insurer

D.

Professional indemnity insurance provides the insured business with financial protection against the liabilities caused by or arising out of the products supplied

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Question # 21

Solus Trading has begun a project to improve the level of delivery performance from its suppliers. They need to develop a key performance indicator (KPI) to measure the performance improvement. Which KPI would be suitable to use?

A.

Percentage of on-time in full

B.

Percentage of rejects and returns

C.

Percentage of cost reduction

D.

Percentage of customer complaints

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Question # 22

Under which of the following scenarios an RFQ is most likely to be used?

A.

Purchase of a small number of standardised products under a framework agreement

B.

Purchase of complex machinery

C.

Design of a unique and complex software code

D.

When the buying organisation does not know the requirements in details and needs the input from suppliers

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Question # 23

One of the important features in the formation of a contract is the need to have a 'consensus ad idem' between the contracting parties. 'Consensus ad idem' can be translated as meaning:

A.

A promise to commit the contract to written form

B.

A meeting of minds where all parties have the same understanding of the terms

C.

Let the buyer beware before agreeing the contract

D.

An agreement on the main item of the contract

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Question # 24

Foodstuffs may arrive from an overseas supplier in a deteriorated state. Is this covered under the implied term of 'satisfactory quality'?

A.

No, it is sale by sample

B.

No, it is sale by description

C.

Yes, the food is not of a reasonable standard

D.

Yes, as the title has not passed yet

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Question # 25

Which of the following are reasons why a purchaser wants to embed a subcontracting clause into the main contract? Select TWO that apply:

A.

To induce the conflicts between the main contractor and subcontractors

B.

To improve supply chain transparency

C.

To reduce the main contract complexity

D.

To keep main contractor liable

E.

To condemn whole liabilities to subcontractors

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Question # 26

Which of the following is the reason why liquidated damage clauses are embedded into a contract?

A.

Because liquidated damages are the only remedy

B.

To penalise the supplier for their wrongdoing

C.

To avoid argument on correct measure of damage

D.

Because compensation will be awarded immediately

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Question # 27

Bandpro is a reseller of branded computer products to the private and public sector. The procurement team must purchase 500 items each day solely by multiple phone calls and emails to suppliers. Due to this practice, it takes a lot of time to track and collect relevant documents.Some important documents even get lost, which makes procurement audit more burdensome. Which of the following would increase the robustness of audit trails in procurement activities?

A.

Every evidence must be recorded by paper

B.

Adopt e-procurement

C.

Spend less time on auditing procurement procedures

D.

Rectify non-compliant activities

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Question # 28

Company A buys a lorry from Company B on hire purchase. During the contractual period, Company A makes default in paying the instalment. Company B has...?

A.

The right to take repossession of the lorry

B.

The option to repossess the lorry

C.

No right to take repossession

D.

Company B has to approach the court

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Question # 29

Which of the following are the conditions for revocation of offer to be valid?

1. The offeree has not received the offer yet

2. Revocation of offer must be communicated with the offeree

3. Revocation of offer must be sent via email

4. Offeree has not accepted the offer yet

A.

2 and 4 only

B.

1 and 4 only

C.

1 and 3 only

D.

2 and 3 only

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Question # 30

XYZ Ltd and Engineer Corp signed a long-term supply contract in which both parties had agreed on performance targets. Recently, due to increased customer demands, XYZ Ltd realises that they should make changes to the contract with Engineer Corp with regards to performance management. These changes are approved and signed by both the buyer and seller. The changes to the contract are known as...?

A.

An amendment to the prime contract

B.

A stand-alone subcontract to the prime contract

C.

An appendix to the prime contract

D.

A separate counter-offer to the supplier

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Question # 31

A school has a contract for the supply of fruit for break time. The school needs the fruit delivered by 10am every morning to be served at 10:30am. How would this best be covered in a commercial agreement?

A.

Note on each purchase order

B.

Pricing schedule

C.

Sales of Goods Act 1974

D.

Contractual term

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Question # 32

Which of the following are the 'fundamental' labour standards laid down by the International Labour Organisation?

1. Elimination of child labour

2. Payment of a minimum wage

3. The right to collective bargaining

4. Abolition of forced labor

A.

1, 2 and 4 only

B.

2, 3 and 4 only

C.

1, 3 and 4 only

D.

1, 2 and 3 only

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Question # 33

XYZ Ltd is negotiating a long-term supply contract of important parts with a supplier. Dave, procurement manager teams up with Alla, legal manager to construct a service level agreement. Dave is concerned that poor performance of supplier may cause damages to the operations of the organisation. Which of the following can be used in conjunction with SLA to compensate the buying organisation in case of supplier's poor performance?

1. Warranties

2. Force majeure clauses

3. Penalty clauses

4. Service credits

A.

1 and 3 only

B.

3 and 4 only

C.

1 and 2 only

D.

4 and 2 only

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Question # 34

A buyer is in the process of supporting colleagues internally in the drafting of a specification for a new product. They have limited personal knowledge of the product and of the market. They are at the very early stages of drafting the specification and are seeking to increase their knowledge, whilst at the same time, keeping their likely future needs a commercial secret at this stage. Which of the following would be the best method of achieving this?

A.

Issue a formal request for information

B.

General networking at relevant trade events

C.

Interview staff from finance

D.

Advertising on a relevant online forum

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Question # 35

Which of the following is always an advantage of using fixed price arrangement in a contract for buying organisation?

A.

Buyer can allocate budget with certainty

B.

Buyer can harness falling market price

C.

Supplier always receives a fixed margin

D.

Suitable for contracts that last 5 years or more

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Question # 36

When writing an implementation section for an IT requirements specification, which factors would be appropriate for inclusion? Select TWO that apply.

A.

Required response timeframes for service requests

B.

Mandatory training required for supplier’s staff

C.

Details of applicable legal and regulatory standards

D.

Integrations required with existing systems

E.

Lists of technical terms and abbreviations

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Question # 37

When a supplier signs an insurance policy with an insurance company, which of the following is transferred to insurance company?

A.

Right

B.

Risk

C.

Legal responsibility

D.

Contractual obligation

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Question # 38

Which of the following are likely to be advantages of using invitation to tender? Select TWO that apply:

Short turnaround times

A.

Quick implementation

B.

Driving forward planning culture

C.

Lower administration costs

D.

Reducing risks of bribery and corruption

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Question # 39

Which of the following statement is true about one-off contract?

A.

Suppliers have many opportunities to improve the quality during the performance of one-off contract

B.

One-off contracts can be used for services and works

C.

Ad-hoc purchase is not a type of one-off purchase

D.

One-off contracts only apply to low-value, low-risk purchase

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Question # 40

Which of the following are driving forces for increasing use of social and environmental criteria in specifications? Select TWO that apply.,

A.

Process efficiencies

B.

Stakeholder pressure

C.

Insufficient financial resources

D.

Scarcity of environmentally sustainable suppliers

E.

Carbon footprint measure

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Question # 41

What are five essential elements of a legally binding contract?

A.

Offer, acceptance, compensation, ability, correct form

B.

Offer, agreement, consensus, capacity, correct form

C.

Offer, acceptance, consideration, capacity, correct form

D.

Offer, acceptance, mediation, capacity, contract

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Question # 42

A tire manufacturer entered into a contract with a distributor. In the contract, the distributor is prohibited from selling the tire under the price list. The distributor must pay $5 for each tire sold in breach. The amount of $5 is known as...?

A.

Penalty

B.

Quantum meruit

C.

Liquidated damages

D.

Caveat Emptor

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Question # 43

As a result of a global pandemic, a local hospital is facing significant patient capacity pressures and would like the construction of a new 50-bed ward to be prioritised and fully operational at the earliest opportunity. Which of the following pricing arrangements would support this aspiration?

A.

Incentivised contract pricing

B.

Fixed price economic adjustment pricing

C.

Time and materials arrangement pricing

D.

Penetration contract pricing

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Question # 44

Which of the following will always give rise to a claim of misrepresentation?

1. Silence

2. False thought

3. Statement of fact

4. Representation by conduct

A.

1 and 2 only

B.

1 and 3 only

C.

3 and 4 only

D.

2 and 4 only

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Question # 45

Which of the following is a disadvantage of using input specifications?

A.

It is difficult to assess suitability of each quotation

B.

It requires a more proactive approach to monitoring

C.

There is less opportunity for innovation

D.

There is no limit to the number of suppliers who can quote

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Question # 46

A buyer and a supplier plan to sign a contract with cost-plus arrangement. If the cost base is $350 and the markup component is 11% then the invoice price will be...

A.

393.26

B.

388.5

C.

368.5

D.

362

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Question # 47

Infra Constructions receive a contract for construction of a building, and following terms were agreed upon. "The entire cost of the project will be reimbursed to Infra Constructions (estimated cost of the project being $ 25 million). The profits will be 20% of the entire cost of a project subject to a max of $ 5 million." This arrangement is an example of...?

A.

Incentive pricing arrangement

B.

Gain-share/pain-share arrangment

C.

Cost-plus pricing arrangement

D.

Fixed-pricing arrangement

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Question # 48

Which of the following are most likely to be liabilities of suppliers under a guarantee clause?(SelectAny Two)

A.

TWO that apply

B.

Repair

C.

Decommissioning

D.

Upgrading

E.

Replacement

F.

Installation

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Question # 49

Information assurance protects information systems and...?

A.

Hard copy

B.

Computers

C.

Inventory

D.

People

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Question # 50

Which of the following may be a benefit for purchaser in using call off contract?

A.

Ability to discover new potential suppliers

B.

No long-term commitment required

C.

Secured supply

D.

Maintaining a degree of competition between suppliers

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Question # 51

Under hire purchase agreement, when will the ownership of asset legally belong to the purchaser?

A.

When the final instalment is paid

B.

When the purchaser takes possession of the asset

C.

When the down payment is made

D.

When the agreement is signed

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Question # 52

Which of the following is a key element for the development of a contract?

A.

Scoping specifications

B.

Contract management

C.

Budget approval

D.

Managing suppliers

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Question # 53

Which of the following best defines an ‘express’ term in general contract arrangements?

A.

It is a standard set of terms and conditions published by CIPS

B.

It is not necessarily discussed by the parties, but nonetheless forms part of the contract

C.

It is the term that is added to the contract by the law or based upon the facts of the case.

D.

It is clearly agreed between the parties, and is virtually always written down in the contract

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Question # 54

Why would you use a non-disclosure agreement?

A.

To protect parties, where information has been shared that is not in the public domain

B.

To allow parties the freedom to disclose confidential information to the public domain

C.

To agree between parties what information is and is not confidential and what can be in the public domain

D.

To give parties permission to share all information in the public domain

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Question # 55

Which of the following statements is FALSE on contracts for the leasing of assets?

A.

The party responsible for maintenance, insurance and taxes is subject to negotiation

B.

In lease agreement, the possession and right of use of an asset are transferred to the lessee

C.

The ownership of leased asset is transferred to the lessee at the end of the period

D.

The lessee may bear some risks of ownership, such as the liability to insure the asset

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Question # 56

In which of the following conditions, request for quotation produces the best results?

A.

With an ambiguous specification

B.

Under framework agreements

C.

Under a complex process

D.

With strategic items

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Question # 57

You are to do the KPIs and targets for international supplier and the following was done

1. Delivery in an hour

2. Return orders in an hour

Is that a good thing or not?

A.

Yes, because these targets will propel the suppliers to continuous improvement

B.

No, the local suppliers are always the best choice

C.

No, because the KPIs are not a realistic and justified

D.

Yes, the higher the targets are, the better the outcomes will be

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Question # 58

Electro Systems PLC is a public sector manufacturer of highly technical solutions for the telecommunications industry. The market in which it operates is fast-paced and ever-changing because of the latest inventions and developments. The products it procures are high-cost and can be subject to lengthy lead times. Michael Jones, the procurement director, believes that establishing framework agreements would be beneficial to the tendering process. How could this assist them?

A.

Improve supplier lead times

B.

Enable the use of mini-competitions

C.

Improve supplier product quality

D.

Enable the use of e-tendering

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