Which of the following statements is true about model form of contract?
Correct Answer: B
Model forms of contract are published by some industry or professional organisations such as FIDIC, ITC, CIPS,... These forms are often carefully prepared by legal professionals, with correct legal terminology. The standard clauses within these forms are based on fair and balanced risk/reward allocation between the contracting parties. The model contract forms also include standard clauses to be selected or deleted on an as required basis. Despite being standardised to be used in any jurisdiction, legal advice may be required if the users decide to make variations to the forms. The correct answer should be "Model contract form's standard clauses often contain correct legal terminology without recourse to third party experts." Reference: CIPS study guide page 144-147 LO 3, AC 3.1
Question 112
Maximum Score 1 Setting key performance indicators (KPIs) for supplier performance should ensure ...
Correct Answer: B
KPIs track and control supplier performance, helping to identify and mitigate supply risks such as late delivery or poor quality. They are a proactive management tool, not a price or sourcing mechanism. Reference: CIPS L4M3 Commercial Contracting - "Purpose and use of KPIs in contract management."
Question 113
Which of the following is the type of insurance that cover the liabilities of service provider such as legal advice, accountancy, technical designs, etc?
Correct Answer: A
The most usual forms of insurance cover are as below: - Employer's liability: Employers' liability insurance, sometimes known as employment practices liability insurance (EPLI), protects employers from financial loss if a worker has a job-related injury or illness not covered by workers' compensation. Employers' liability insurance can be packaged with workers' compensation insurance to further protect companies against the costs associated with workplace injuries, illnesses, and deaths. Employers' liability insurance is also called "part 2" of a workers' compensation policy. - Public/product liability: Public liability insurance covers you against any claims made against your business - for example if you were held legally liable for personal injury, or for damage done to property. The insurance will also cover you for any legal costs associated with defending claims against your business. - Professional indemnity insurance (PII): Professional indemnity or liability insurance offers such coverage to professional advice or service providing individuals and companies ensuring protection against any legal costs and damages awarded as a result of claims relating to negligence. Whereas more general forms of liability insurance focus on direct forms of harm such as sustaining injuries, professional indemnity insurance provides a far more detailed and comprehensive form of coverage. The cover protects a firm or individual's liability relating to any financial loss caused by errors or omissions in the service provided as well as any alleged failure to perform on behalf of a client. - Goods in transit coverage: Goods in transit insurance, sometimes referred to as GIT, covers goods against loss or damage while being moved from one place to another. These goods can be being carried by individuals in their own vehicle, self employed drivers or contractors or by third party carriers. The insurance can cover both domestic and international trips, with specific add-ons available for insurance within Europe. Reference: CIPS study guide page 151-152 LO 3, AC 3.2
Question 114
In the UK, Unfair Contract Terms Act 1977 regulates which of the following?
Correct Answer: C
The Unfair Contract Terms Act 1977 (c 50) is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The terms extend to both actual contract terms and notices that are seen to constitute a contractual obligation. Under this regulation, if a clause within the standard terms in use is considered as 'unfair', the clause will be ineffective (or the other party will be entitled to avoid the clause). At court, the clause that is deemed to be unfair will undergo a 'reasonableness' test or an 'unfairness' test. Reference: - Maybe your standard terms are ineffective. Here's why - CIPS study guide page 135 LO 3, AC 3.1
Question 115
A procurement officer decides to approach the supply market regarding a procurement activity that will specify the use of technology that is very new to the market. The procurement officer is taking this step before the formal tender process is started. Is this approach permitted?
Correct Answer: A
Early market engagement is encouraged in procurement best practices. It helps procurement teams understand new technologies, identify capable suppliers, and inform the development of effective specifications and contract terms. However, it must be non-binding and conducted fairly to ensure no supplier gains an unfair advantage. Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 2, Section 2.1.1 - Benefits and risks of market dialogue with suppliers.
