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CIPS – Commercial Contracting (L4M3) paper 9.
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1.
An invitation to treat should not be treated as an offer. Is this statement correct?
2.
Which of the following are correct examples of an invitation to treat?
1. Asking one party to pay a certain amount for an enhanced product
2. Displaying goods with price tags on a supermarket display
3. Asking for a price reduction on a product perceived as old
4. Advertising a newly manufactured product to stimulate demand
3.
Which of the following will terminate an offer?
1. Revocation
2. Acceptance
3. Intention
4. Consideration
4.
In relation to contract formation, completion of both offer and acceptance constitutes which of the following?
5.
Which element of a legally enforceable contract constitutes a form of mutual exchange by the contracting parties?
6.
Bonga Mobiles (BM) is a mobile phone manufacturing organization based in Germany. They have their small manufacturing branch named Sema Mobiles located in South Africa. Sema Mobiles was set up to provide a service to a number of African countries. Plug Technologies, a mobile phone retailer, has placed an order for 5000 mobile phones from Sema Mobiles. Which of the following should Plug Technologies request from Tee Mobiles in case Sema Mobiles fails to meet Plug Technologies’ requirement?
7.
Usafi Clean Group (UCG) is a large facilities management organization. One of its procurement officers (PO) has a meeting with a cleaning company about a potential future contract. The cleaning company has already submitted a quote to the PO, based on a specification that was provided. The PO explained that he had the authority to commit UCG to the contract and confirmed that the price was acceptable for the services being offered. The PO and the cleaning company agreed that the contract would commence in one month’s time. In addition to the offer and acceptance, which of the following from this scenario makes this a legally binding contract?
1. Warranty
2. Precedence
3. Consideration
4. Capacity
8.
For consideration to be valid, it must consist of which of the following requirements? Select the TWO that apply.
9.
The concept of ‘battle of forms’ relates mostly to which of the following?
10.
Where a company is bidding for a contract but it has a poor credit rating, the procurement organization could obtain which of the following from the parent company to reduce the risk?
11.
Cabro Constructions Limited(CCL) has been contracted by a procurement organization to complete the construction of some apartments to be used for accommodation. Before the contract was signed, CCL was required by the procurement organization to provide a written promise to take responsibility for any faults or costs that might be incurred if any unsatisfactory performance is identified? Which of the following was used by the procurement organization to reduce the risk of poor performance from CCL?
12.
An indemnity clause is suitable to be used under which of the following circumstances? Select the TWO that apply.
13.
A large manufacturing company has begun a project to increase the size of its premises. The procurement team has estimated that if the main supplier fails to complete the project on schedule, it will incur costs and losses of $20,000 per day for every day there is a delay. Which of the following clauses should the large manufacturer use in the contract with the supplier?
14.
Which of the following are examples of the losses that cannot be indemnified in a contract between the buyer and supplier?
1. A loss caused by the negligence of the supplier during contract performance
2. Loss caused by the deliberate act of the receiving party
3. Loss caused by supplier incompetency when carrying out contract obligations
4. A loss caused by the receiving party’s own crimes
15.
In a contract between two parties, consideration must have which of the following to meet its sufficiency requirements?
1. Consideration must be provided by one party of the contract to another
2. Consideration needs to have a monetary value
3. Consideration or exchange needs to be equal
4. Consideration needs to be present or future, not past
16.
Which payment mechanism is perceived as more risky to the buying organization?
17.
A counter-offer is treated as a rejection of the initial offer. Is this statement correct?
18.
The use of a third-party subcontractor is allowed in a contract between the parties. Is this statement correct?
19.
KARO Limited has been contracted in the building of a high school, which needs to have a capacity of 10,000 students completed. The project has tight completion schedules which KARO Limited has to comply with. As the project continues, KARO Limited realizes that there is a need to subcontract due to the need for some special and technical skills arising which they do not have the capacity to fulfill. KARO Limited immediately decides to find a subcontractor to carry out these special activities? Is this the right approach?
20.
Which of the following are ways in which a contract between two parties can be terminated? Select the THREE that apply.
21.
Which of the following factors must the courts consider before awarding damages to the innocent party in case of a breach of contract?
1. Size of the breach
2. Impact of the breach
3. Precedence
4. How easy it is to remedy
22.
When assessing the amount of damages to be awarded to an injured party, it is always important for the courts to consider the amount of work already performed by the defaulting party. Is this statement correct?
23.
Which of the following options does the innocent party have in the event of a major breach of contract?
1. Terminate the contract
2. Switch suppliers
3. Affirm the contract
4. Negotiate remedies
24.
Which of the following is the main disadvantage of using liquidated damages as a method for compensation of breach?
25.
Which of the following are characteristics of liquidated damages within a contract?
1. State the financial implications for the supplier
2. Explain the process for dispute management
3. Apply excessive penalties for all breaches
4. Set out the circumstances when they apply
26.
The general principle relating to penalty clauses is that they must be which of the following to be legally enforceable by the courts?
1. An adequate punishment for the supplier's failure
2. Enough to justify any legal action against the supplier
3. Proportionate in relation to the interest of the innocent party
4. Reasonable in the context of the losses incurred
27.
Express terms apply in all contracts through the buyer’s and supplier’s statutory rights. Is this statement TRUE?
28.
Is it always necessary to include a force majeure clause in a contract of services with a supplier?
29.
A buyer is seeking to include a clear performance procedures clause within the contract to act as a lever to encourage the supplier to focus on achieving the stated performance measures. Should they consider using a clause applying service credits?
30.
Which of the following are contractual financial remedies relating to either non-or under-performance of a supplier?
1. Liquidated damages
2. Payment terms
3. Service credits
4. Termination clauses
