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The CIPS L5M3 exam is suitable for procurement professionals who are responsible for managing contractual risk within their organizations. This includes contract managers, procurement managers, and legal professionals who work in procurement. The exam is also relevant for professionals who work with suppliers and other stakeholders in the procurement process.

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CIPS Managing Contractual Risk Sample Questions (Q79-Q84):

NEW QUESTION # 79
Which of the following will you put into box 5?

A. liquidated damages
B. liability
C. Contract variation
D. payment terms

Answer: D

Explanation:
The correct answers are as follows:

This is payment terms - the discussion is about amending the payment terms from 60 days to 30 days.

NEW QUESTION # 80
When there has been a major breach in a contract, the contract will be terminated. Is this statement true?

A. yes- the contract must be terminated as there is no means by which the contract could continue after a major breach
B. no- the contract can be affirmed by the injured party
C. no- the contract can continue if the offending party proves that further breaches won't occur
D. yes- the contract will be terminated and damages sought

Answer: B

Explanation:
"no- the contract can be affirmed by the injured party" is the correct answer. When there is a breach in a condition, one of two things can happen; the contract is terminated, or the contract is affirmed. The injured party has the choice of whether or not they want to continue working with the other party and this is called 'affirmirmation of the contract'. The contract doesn't HAVE to be terminated in the case of a major breach so options 1 and 2 are incorrect. Option 4 is also incorrect- the contract can continue even if the offending party says they'll commit further breaches - it's completely up to the injured party whether they want to continue working with them or not. See p. 46 for further details

NEW QUESTION # 81
Which of the following will you put into box 6?

A. Mediation
B. Negotiation
C. Litigation
D. Arbitration

Answer: C

Explanation:
The correct answers are as follows:

Litigation is the only resolution method which goes 'through the courts'. Therefore this is the correct answer

NEW QUESTION # 82
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?

A. claim on insurance
B. subcontract the manufacturing of the flipflops to a third party
C. nothing- there is no written contract in place
D. sue for damages as the flip flops have already been made and this incurred costs

Answer: D

Explanation:
Verity can sue for damages. The order was placed over the phone meaning that there was a verbal contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect. There is no termination clause mentioned in the question so you can assume that there isn't one. This means that the retailer is committing a breach of the verbal contract by cancelling the order. Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!). This question tests your understanding of when contracts can be terminated and remedies for breaches. See p. 134.

NEW QUESTION # 83
John has signed a document with Larry that says that he will give Larry his car. Both John and Larry are over the age of 18 and are of sound mind. Larry accepts this offer and signs the document. Is this a contract?

A. yes- it has been signed
B. no- this document is an invitation to treat
C. yes- both parties consent and have capacity to do so
D. no- there is no consideration

Answer: D

Explanation:
No - There is no consideration. For a document to be considered a contract there must be consideration. This means something of value must be exchanged. In this example John gives Larry something but Larry doesn't give John anything. Therefore there is no consideration and this is not a contract. See p.12

NEW QUESTION # 84
......

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