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CIPS Commercial Contracting Sample Questions (Q27-Q32):

NEW QUESTION # 27
Which of the following is used to detail the complex matter that may be verbiage to the main document?

A. Standard terms and conditions
B. Contract variation
C. Schedule
D. Subcontracting

Answer: C

Explanation:
Without further explanation, a schedule may be deemed to form an integral part of the obligations of either or both parties. Obviously, the scope or binding nature of such schedule depends on the way it is referred to in the obligatory language of the main agreement. Accordingly, merely attaching the general terms and conditions of sale without explaining to which part of the sale they apply or which provisions apply does not subject a sale pursuant to the body text of the agreement to those general terms and conditions.
Subcontracting is the practice of assigning, or outsourcing, part of the obligations and tasks under a contract to another party known as a subcontractor.
Reference:
- Schedules, annexes and exhibits
- CIPS study guide page 22-26
LO 1, AC 1.1

NEW QUESTION # 28
Maximum Score 1
Drafting a specification is important because these documents become embedded within the contract and therefore, are legally binding. Is this statement true?

A. Yes, because all specifications must be approved by the organisation's board according to legislation
B. No, because legally binding contracts only contain terms and conditions
C. Yes, care needs to be taken because the specification should be part of the contract
D. No, as the specification is separate to the contract and has no legal standing

Answer: C

Explanation:
Specifications are normally attached as schedules and form part of the contract; they define deliverables and performance standards.
Therefore, once signed, they become legally binding - errors or ambiguity can create disputes.
Reference: CIPS L4M3 Commercial Contracting - "Specifications and schedules as binding documents."

NEW QUESTION # 29
A construction company is undertaking a housing development project. They need lots of bricks and other building materials, but the construction site doesn't have large area for storage of materials. Therefore, the company's suppliers must deliver the building materials with fixed quantity and at fixed time intervals. What type of contract is used between the construction company and its suppliers?

A. One off contract
B. Call off contract
C. Framework agreement
D. Spot transaction

Answer: B

Explanation:
In the scenario, the contract between the company and its suppliers is continuous rather than one-off. So it cannot be one-off contract or spot purchase. The quantity and time is well known and fixed, this type of contract is known as call-off contract or blanket order.
Reference:
LO 1, AC 1.3

NEW QUESTION # 30
Which of the following might be considered as advantages, to the supplier, of key performance indicators (KPIs)? Select TWO that apply.

A. They help the supplier to ensure that they do not exceed the target performance levels
B. They help the supplier to avoid confusion arising from unclear expectation from buyers
C. They help the supplier to achieve higher productivity by cutting down on other aspects like quality
D. They help the supplier to share their best cost-saving systems with their competitors
E. They help the supplier to focus on specific critical success factors and maximise on effectiveness

Answer: B,E

Explanation:
From the supplier's perspective, well-constructed KPIs:
* Focus on critical success factors (A) - allows the supplier to allocate resources effectively and improve performance where it matters most.
* Clarify expectations (C) - clear KPIs reduce confusion and misunderstandings about what the buyer actually needs.
Options B, D and E are either negative or nonsensical from a supplier-advantage viewpoint:
* Cutting quality (B) is not a legitimate advantage; it increases risk.
* Sharing best systems with competitors (D) is definitely not an advantage.
* Ensuring they do not exceed performance levels (E) is not beneficial; suppliers often want to exceed targets for reputation or gain-share.
Reference: CIPS L4M3 Commercial Contracting - Benefits of KPIs for buyers and suppliers.

NEW QUESTION # 31
Which of the following are reasons why a buying organisation adopts a model contract?
1. Extremely advantageous terms for buyer
2. Correct legal terminology
3. Supplier cannot make variation to the model form
4. Specific to industry

A. 1 and 2 only
B. 1 and 4 only
C. 2 and 3 only
D. 2 and 4 only

Answer: D

Explanation:
Advantages for the use of model forms of contract include:
* Helps to reduce the time and cost in contract development, particularly in detailed negotiation of terms and conditions.
* Avoids starting from the beginning each time, avoids" re-inventing the wheel" each time.
* Model contract forms may be widely accepted by both buyers and sellers across the industry or sector.
* Model contract forms are even handed and designed to be fair to both parties in the contract.
* Model contract forms include standard clauses that can be selected or deleted on an as required basis.
* Model contract form's standard clauses are more likely to contain the correct legal terminology without recourse to third party experts.
Disadvantages of this type of contract include:
* Terms may be less advantageous, than may be achieved through negotiations, particularly where there is one party who is much stronger than the other.
* The generic contract may be difficult to adapt to the specific circumstances between two parties.
* Terms may not necessarily include special clauses or requirements to cover a particular or unusual situation.
* Legal advice and input may still be required, particularly where significant variations to the norm are required.
* There may be costs associated with training staff in the detailed application of the model forms of contract.
Reference:
- D5 Sample QUESTION and answer
- CIPS study guide page 147
LO 3, AC 3.1

NEW QUESTION # 32
......

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