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CIPS – Commercial Contracting (L4M3) paper 8.
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1.
How should a key performance indicator be used in commercial contracting?
1. As a price negotiation tool pre-contract
2. A metric for managing performance
3. To focus on getting the important things right
4. To maintain a library of subjective data
2.
Adobe Computing is a computer hardware stockist and distributor. It offers a next day carriage service to all of its customers, which is unique in the industry and gives them a competitive advantage over their competitors. Efficient management of its inventory is key in order to meet customer expectations and maintain profitability. It is experiencing some issues with the transportation of goods and is looking to develop some key performance indicators with its suppliers. Which of the following would help?
3.
Matthew is a new procurement manager who has recently joined Jessie’s Facilities Management LTD. The company provides maintenance services through the utilization of subcontractors. It is experiencing a number of issues with its supply chain which has resulted in customer complaints, and Matthew would like to introduce Service Level Agreements to some of its key providers. Which of the following should be included?
1. How often the service will be provided
2. The procedures to be followed to resolve disputes
3. The qualifications needed by staff providing the service
4. The stock maintained by the subcontractor
4.
Flash Delivery LTD are a national provider of parcel delivery services. A high proportion of the services it provides are undertaken through a Subcontracting network of delivery drivers. It is presently renegotiating all of its subcontracted services and is looking to develop Service Level Agreements with its providers. Which of the following should form part of the SLA document?
5.
You are a Procurement manager for a successful electrical component reseller and distributor. The company presently carries stock of over fifty thousand different items. Some of which may be variances of the same product or similar products from different manufacturers. The managing director of the business is looking to increase the margin of products sold and has asked for your support. It is a competitive industry with a customer base that will be resistant to price increases. Which of the following could support this request?
6.
You are a buyer working in a busy procurement office. A colleague from another department would like to procure some new electrical equipment which is essential to their operation. They are specifying a branded version which is almost double the cost of some acceptable alternatives available in the market. You are keen to ensure that their preferred product represents best value. What are your considerations?
1. The inspection cost of the alternative product
2. The overall cost of the purchase
3. The quality of the branded product
4. The validity of the branded product
7.
Offer and acceptance are essential elements of a legally binding contract. Which of the following activities are likely to be considered as an offer in the transaction between the buyer and seller?
1. The buyer dispatches a request for quotation to the supplier to complete and return
2. The supplier returns a duly completed request for quotation
3. The buyer submits a bid for an item on the online auction site
4. The supplier sends an email copy of the dispatch advice
8.
The design department has submitted to the buyer a detailed technical drawing which should be attached to the request for quotation forms going out to suppliers. Is the buyer correct in this action? The buyer has classified this drawing as a functional specification for subsequent sourcing processes.
9.
The requirement to adhere to which of the following international standards relates to environmental considerations in specification?
10.
The costs in a cost reimbursable contract are described as?
11.
Bridget has placed an order for the support and installation of six new servers for a total amount of £600,000 from Supplier A. Which of the following could potentially be treated as examples of liquidated damages clauses within the contract for the Supply of the servers?
1. If the supplier delivers any of the servers late £1000 per servers will be deducted from the order per day.
2. This contract is subject to delay remedies of £X- the amount to be agreed by both parties during delivery
3. If the performance of any of the server's degrades within five years, a full refund of £600,000 will be provided
4. The sum for breach of the completion date for the order is £40,000 per day up to a maximum of 50% of the contract price
12.
Where a supplier is incentivized to deliver improvements that create added value for the buyer, this is described as what type of outcome?
13.
A service contract for cleaning is due for expiry after a five-year duration. Which of the following are good sources of data to create a specification for the new invitation to tender?
1. Incumbent supplier
2. Maintenance Services
3. Alternative suppliers
4. Management information
14.
A purchase order has been raised for £5000. It allows the user department to order items of £50 value when they need them. This is an example of what type of order?
15.
Kevin is putting together the final version of a contract to send out to a supplier. He places certain documentation into additional contract schedules at the end of the main contract. Which of the following would be suitable inclusions to the additional schedules? Select two that apply
16.
Boniface sees a coat displayed in a shop window with a price tag of £100 in it. When Boniface goes into the shop to buy it, the shop owner says the window display had an incorrect price on and the coat is actually £120. Boniface argues that the shop has to honor the £100 – is she correct?
17.
Which of the following should be steps in the preparation of an invitation to tender? Select two that apply
18.
Which of these are remedies for misrepresentation?
1. The contract is void
2. Recission of the contract
3. Caveat emptor
4. Damages
19.
Canopy LTD supplied tyres to Chamber LTD. Chamber LTD agreed in the contract that for any specified breaches of contract, it would pay Canopy LTD £5 per tyre sold in breach. It subsequently sold tyres below the listed price, which was one of the breaches mentioned in the contract. What is the £5 per tyre provision an example of?
20.
Which of these key performance indicators are qualitative? Select two that apply
21.
Whilst it is recognised that longer term contracts have the potential to drive significant benefits for the organisation, a number of situations are more suited to making one-off purchase. Which of the below situations is likely to be more suited to a one off purchase?
22.
Which of these describes the function of a non disclosure agreement?
23.
In the creation of a contract with an overseas supplier, a procurement manager insists that the suppliers adhere to the CIPS Corporate Code of Conduct and to conduct all business relationships with respect, honesty, and integrity and avoid causing harm to others as a result of business decisions. Was this the correct thing to do?
24.
When providing a conformance specification, the buyer details exactly what the required product or item must consist of. The supplier may not know in detail, or even at all, what purpose the item will play in the buyer's business. The supplier is expected to strictly conform to the buyer's specification. The buyer therefore bears the greatest risk if the specification fails. Which of the following might describe a conformance specification?
25.
Which of the following might be considered as advantages to the supplier of key performance indicators? Select two that apply?
26.
Standards are documents that stipulate or recommend minimum levels of performance and quality levels of goods and services The government is the only source of any standards that applied in business in Nations. Is this correct?
27.
You are a buyer who is presently collating the necessary data and information for a forthcoming tender. The project is for the Supply and installation of numerous car park barriers and related equipment. It will also need to include the provision of spare parts to support the maintenance provision for an ongoing period. Which of the following would be an appropriate price arrangement?
28.
You are a senior buyer in a large manufacturing company. The engineering team is looking for a product that will assist them in a new innovation project. The technology is evolving, and the product supplied is likely to be bespoke to the supplier. You are suggesting the use of a performance specification as part of the tender. What is the main reason for this?
29.
The exclusion of liability is restricted by statute for which of the following. Select two that apply
30.
Is a verbal contract legally enforceable
