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L5M3 Exams
L5M3 Quick Exam-Ready Summary:
- Core Module
- Objective / Response Exam
- 1.5 hours Exam duration
- 60 Questions in exam
- 6 Credits Score
Principles of Contract Law
Formation, enforceability, offer/acceptance, interpretation, implied vs express terms
Sources of Contractual Risk
Performance, financial, legal, reputational risks; external changes; bargaining power
Contract Terms & Remedies
Key clauses (indemnities, LDs, limitation, termination); remedies (damages, SP, injunctions)
Managing Contract Performance & Risk
Risk allocation, insurance, subcontracting, performance monitoring, dispute resolution
International & Complex Contracting
INCOTERMS, governing law, CISG; PPPs, outsourcing, frameworks; IP, confidentiality, ESG
CIPS L5M3 Exam Focus Areas – 2025 (Master List)
“These are core learning areas, but CIPS may include questions from other parts of the syllabus.” ⚠️
1. Principles of Contract Law in Procurement
- Nature of Contracts:
- Legal enforceability: offer, acceptance, consideration, intention, capacity
- Difference between formal/informal, bilateral/unilateral contracts
- Role of privity of contract and third-party rights
- Distinction between conditions, warranties, and innominate terms
- Formation of Contracts:
- Offer vs. invitation to treat
- Counter-offers, acceptance, and “battle of the forms”
- Rules on electronic contracts and e-commerce
- Certainty of terms and agreement to agree
- Contract Interpretation:
- Express vs implied terms
- Standard terms vs bespoke drafting
- Parol evidence rule and interpretation principles
2. Sources of Contractual Risk
- Types of Risk in Contracts:
- Performance risk (non-delivery, poor quality, delay)
- Financial risk (price volatility, insolvency, exchange rates)
- Legal risk (invalid contracts, unenforceable terms, breach of law)
- Reputational and ethical risk (supplier misconduct, ESG failures)
- External Influences:
- Force majeure and frustration of contracts
- Regulatory, political, and environmental changes
- International trade complexities (INCOTERMS, governing law, jurisdiction)
- Contractual Imbalance:
- Unequal bargaining power
- Unconscionable terms and exclusion clauses
- Supplier dominance or monopsony
3. Contract Terms and Remedies
- Key Clauses for Risk Management:
- Indemnities, guarantees, and warranties
- Liquidated damages vs penalties
- Limitation of liability
- Termination rights (for cause, for convenience, insolvency, breach)
- Payment terms and retention of title
- Remedies for Breach:
- Damages (compensatory, consequential, liquidated)
- Specific performance
- Injunctions
- Termination of contract
- Restitution
- Contractual Protection Tools:
- Model contract forms (NEC, FIDIC, JCT)
- Escrow, bonds, letters of credit
- Step-in rights and risk-sharing clauses
4. Managing Contract Performance and Risk
- Risk Allocation Approaches:
- Shared vs transferred vs retained risks
- Insurance provisions in contracts
- Passing risk through subcontracting or supply tiers
- Performance Monitoring:
- KPIs, SLAs, balanced scorecards
- Contract management plans and governance structures
- Performance bonds and incentives
- Dispute Avoidance and Resolution:
- Negotiation and mediation
- Arbitration vs litigation
- Escalation procedures in contracts
- Lifecycle Considerations:
- Pre-award: due diligence, supplier qualification, risk evaluation
- Post-award: monitoring, compliance, amendments
- Exit strategies: contract expiry, renewal, phase-out
5. International and Complex Contracting
- International Aspects:
- INCOTERMS (allocation of risk, cost, responsibility)
- Choice of law and jurisdiction clauses
- CISG (Vienna Convention on International Sale of Goods)
- Cross-border enforcement of contracts
- Complex/Strategic Contracts:
- Public-private partnerships (PPP) and long-term infrastructure contracts
- Outsourcing and service level agreements (SLAs)
- Framework agreements and call-offs
- Consortium or joint venture contracts
- Specialist Risk Areas:
- Intellectual property (ownership, licensing, infringement)
- Confidentiality, data protection, and cybersecurity
- ESG-related clauses (modern slavery, sustainability obligations)
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