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CIPS Managing Contractual Risk Sample Questions (Q19-Q24):

NEW QUESTION # 19
What is a Prime Contract?

• A. A contract between an end customer and a company which has full responsibility for its performance
• B. A contract between a supplier and a subcontractor
• C. A contract between a public sector organisation and the taxpayer
• D. A contract between a buyer and main supplier

Answer: A Explanation:
"A contract between an end customer and a company which has full responsibility for its perfor-mance" is the correct answer. This is the definition of Prime Contract given on p. 47
NEW QUESTION # 20
Sarah is a baker and orders free-range eggs from a local supplier which she uses to make cakes. There is a contract in place which included a specification that states that the eggs must be free-range. One day the supplier delivers eggs which Sarah uses in the cakes. Later she dis-covered that these were not free-range. Sarah believes that the supplier has broken the con-tract. Is this true?

• A. Yes- this is a breach of a condition
• B. Yes- this is a fundamental breach
• C. no- the specification is not a contract document
• D. no - there has been a breach in a warranty

Answer: D Explanation:
"No- there has been a breach in warranty" is the correct answer. The key to answering this question lies in the fact that the specification in this example is a warranty rather than a condition of the contract. P.45 of the study guide explains that the Sale of Goods Act has implications on whether or not a specification is a condition, warranty or innominate term and it's all about whether the product is in 'good condition' and can be used for its intended purpose. In this example the eggs were used for their intended purpose and were in good condition (or Sarah wouldn't have put them in the cakes). Therefore in this example, the eggs needing to be free-range is a warranty of the contract not a condition. Therefore options A and B are both wrong. Answer C is also wrong because the question mentioned that the specification was included in the contract. If you want to know more about the implication of the Sale of Goods act on specifications see p.45.
NEW QUESTION # 21
Which of the following will you put into box 8?

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

Answer: C Explanation:
The correct answers are as follows:

This is arbitration as it involves a panel.
NEW QUESTION # 22
Which of the following would not be considered acceptance of a contract term?

• A. an invoice
• B. accepting a delivery of a product into the factory
• C. silence
• D. a handshake

Answer: C Explanation:
Silence is not acceptance. Acceptance can be in writing, verbal or implied by conduct. The three other options are ways in which a contract could be accepted by conduct. See p.8 of the study guide
NEW QUESTION # 23
Which of the following will you put into box 5?

• A. Innominate Term
• B. Warranty
• C. Condition

Answer: C Explanation:
The correct answers are as follows:

This is a condition as it is fundamental to the contract.
NEW QUESTION # 24
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