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CIPS Managing Contractual Risk Sample Questions (Q15-Q20):

NEW QUESTION # 15
A failure to perform a provision of a contract which does not affect the end performance of the contract is known as what?

• A. minor breach
• B. major breach
• C. warranty breach
• D. small breach

Answer: A Explanation:
This is a minor breach. This is the definition as given in the study guide on p. 48
NEW QUESTION # 16
A breach which is so severe that it goes to the root of the contract is known as what?

• A. essence breach
• B. major breach
• C. condition breach
• D. fundamental breach

Answer: D Explanation:
This is a Fundamental Breach. Fundamental Breach and Major Breach are very similar- they're both really bad and can lead to damages and the termination of the contract. The difference is that a Fundamental Breach is so bad that it goes to the root of the contract - a breach so bad that the contract is basically worthless. For example if you make a contract with a supplier to have potatoes delivered but it turns out they don't sell potatoes, only apples, and they keep sending you apples instead of potatoes. This would be a fundamental breach because its something so fundamental to the contract that there's no point in the contract existing if there's a breach like this. Condition Breach and Essence Breach are made up words- they don't exist. P.44
NEW QUESTION # 17
Popsi Cula is a manufacturer of sugared beverages and produces over 5000 tonnes of soda each day. It is extremely important that ingredients are delivered to the factory on specific days in order for the production to keep to its very tight schedule. Popsi Cula is onboarding a new supplier - which of the following clauses would it be important for the contract to contain?

• A. limitation of liability
• B. time is of the essence
• C. liquidated damages
• D. KPIs

Answer: B Explanation:
A Time is of the Essence Clause should be included. This stresses the importance of obligations being completed on time, with any delays (e.g. in delivery of ingredients) being treated as a breach of a condition. The other three options are probably important to have in a contract, but don't relate specifically to this example. See p.45 for more information on Time is of the Essence Clauses
NEW QUESTION # 18
Which of the following conflict resolution styles involves a strict timeline and is commonly used within the construction industry?

• A. arbitration
• B. litigation
• C. adjudication
• D. conciliation

Answer: C Explanation:
Adjudication has strict timescales (this is one of the advantages of using this conflict resolution method). It has roots in the construction industry and has been widely used since the 1990s. See p.76 for more information
NEW QUESTION # 19
George is a procurement manager at a manufacturing company and is reviewing a contract he has with a supplier. He notes that there are multiple appendices to the contract and there is no Precedence of Documents. What does this mean for the contract?

• A. the contract is not valid
• B. clauses in the contract take precedent over clauses in the appendices
• C. all clauses are considered equal
• D. the clauses that come first in the document, take precedent

Answer: C Explanation:
Where there's no order of precedence, it is assumed that all documents have equal significance. This is a direct quote from the study guide p.15
NEW QUESTION # 20
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CIPS L5M3 - Managing Contractual Risk First-grade Reliable Exam Labs

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