CIPS L4M3 Exam Questions Instant Access - No Installation Required

Question 1

According to rule of contract formation, which of the following is a valid acceptance?

AThe person orally agrees to pay the offered price

BThe person states that she is able to pay the offered price

CThe person asks for a lower price

DThe person says that she will think about it overnight

Answer : A

Once a valid acceptance takes place, a binding contract is formed. It is therefore important to know what constitutes a valid acceptance in order to establish if the parties are bound by the agreement. There are three main rules relating to acceptance:

1. The acceptance must be communicated to the offeree.

2. The terms of the acceptance must exactly match the terms of the offer.

3. The agreement must be certain.

Among the answers:

'The person says that she will think about it overnight' does not match the terms of the offer. The offeree does not assure that she will accept the offer.

'The person asks for a lower price': This is a counter-offer.

'The person states that she is able to pay the offered price' is not certain. The offeree merely provides information on her financial ability.

- Contractual agreement - offer and acceptance

- CIPS study guide page 33-35

LO 1, AC 1.2

Question 2

Transformers & Rectifiers Ltd wanted to buy some specialist gaskets. They sent a request for quotation with specification to Needs Ltd. The supplier replied with a quotation in which had its own terms and conditions. The buyer edited delivery terms on the quotation and sent the document back to Needs Ltd. Gaskets were delivered to Transformers' premise with an invoice from Needs Ltd. Which of the following is most likely to be the governing terms if the two companies must settle the dispute at court?

AEdited terms and conditions

BTerms and conditions in the request for quotation

CTerms and conditions in the invoice

DTerms & conditions in the original quotation

Answer : A

In the 'battle of the forms', generally who shot the last will win. This is not applied to this case. Initial RFQ is an invitation to treat, then the quotation forms an offer. Transformers & Rectifiers Ltd edits terms and conditions then sends back to supplier, this act terminates Needs's offer and makes a new offer. Delivery of goods can be deemed as acceptance from Needs Ltd. The contract is formed with its details in the edited terms and conditions.

LO 1, AC 1.2

Question 3

Maximum Score: 1

Buyer O has placed an order for the supply and installation of six new servers for a total amount of 600,000 from Supplier A. Which of the following could potentially be treated as examples of a liquidated damages clause within the contract for the supply of the servers?

If the supplier delivers any of the servers late, 1,000 per server will be deducted from the order per day

This contract is subject to delay remedies of X - the amount to be agreed by both parties during delivery

The sum for breach of the completion date for the order is 40,000 per day up to a maximum of 50% of the contract price

If the performance of any of the servers degrades within five years, a full refund of 600,000 will be provided

A1 and 2 only

B3 and 4 only

C1 and 3 only

D2 and 4 only

Answer : C

Liquidated damages (LDs) are pre-agreed sums payable for specific breaches (commonly late delivery), intended as a genuine pre-estimate of loss.

Clause 1: 1,000 per server per day for late delivery clear pre-agreed daily amount = LD.

Clause 3: 40,000 per day up to 50% of contract price again, defined LD structure.

Clause 2: ''Amount to be agreed'' is uncertain and not a valid LD amount.

Clause 4: A full refund after five years for performance degradation is more like a warranty / guarantee, not a liquidated damages clause.

Thus, LD examples are 1 and 3 only option C.

Question 4

Which of the following is a benefit to the buyer of using model form contracts?

AThe terms used are advantageous to the buyer

BIt reduces time and costs in developing a formal contract

CNo legal advice is required as variations are not accepted

DMost suppliers are unfamiliar with the terms used

Answer : B

Model form contracts streamline procurement processes by providing pre-agreed and widely understood terms, which reduce the time and legal costs of contract drafting. These are especially useful in complex industries and promote consistency and fairness.

Question 5

A service contract is going to be expired, which data source is good to create specifications for ITT?

1. Incumbent supplier

2. Maintenance services

3. Alternative supplier

4. User's knowledge

A1, 2 and 3

B1, 3 and 4

C1, 2 and 4

D2, 3 and 4

Answer : B

There are a number of shortcuts that can be taken when drafting the specification. These include the following:

- The use of brand names

- The use of recognised standards

- The use of samples

- Information and knowledge from users/other buyers: Drafting a specification should naturally include those already used within the organisation itself, but also variants used by other companies in the same sector and other companies in different sectors

- Information from suppliers: suppliers will always be willing to assist in specification development, as this this one way in which they can seek to influence the design to favour their own products.

LO 2, AC 2.1

Question 6

The contracts manager at a newly established private transport agency, Travel Response Services (TRS), has been asked to draft a set of standard terms and conditions that will protect customers' personal information when it is passed to sub-contracted suppliers by TRS. Which standard clause would be best suited for this?

AAn intellectual property rights clause

BAn invoicing and payment clause

CA corporate social responsibility clause

DA confidentiality and use of data clause

Answer : D

A confidentiality and data use clause is designed to govern how information, especially sensitive or personal data, is handled. It sets boundaries on disclosure, data sharing, and use, which is essential under data protection laws such as GDPR, especially when information is passed to third parties.

Question 7

Information assurance protects information systems and...?

AHard copy

BComputers

CInventory

DPeople

Answer : B

Information Assurance (IA) is the practice of managing information-related risks and the steps involved to protect information systems such as computer and network systems. The IA transformation is a partnership that stretches across the Department of Defense (DoD), Office of National Intelligence, Committee on National Security Systems, National Institute of Science and Technology (NIST), and the Office of Management and Budget.

The US Government's definition of information assurance is:

''measures that protect and defend information and information systems by ensuring their availability, integrity, authentication, confidentiality, and non-repudiation. These measures include providing for restoration of information systems by incorporating protection, detection, and reaction capabilities.''

- What is Information Assurance (IA)?

- CIPS study guide page 99-100

LO 2, AC 2.1

CIPS Commercial Contracting L4M3 Exam Questions