CIPS L5M3 Exam Questions Instant Access - No Installation Required

Question 1

Alan has an ongoing contract with a supplier for the provision of gardening tools to his horti-culture business. He has been working with the supplier for over 20 years and has recently discovered that the supplier committed a breach in a warranty 3 years ago. Can Alan claim damages?

Ayes- the breach has occurred and a contract is in place

Byes- Alan can claim damages and rescind the contract

Cno- Alan could only claim if the breach was of a condition, not a warranty

Dno- Alan cannot claim because the breach was so long ago

Answer : A

'Yes- A Breach has occurred and a contract is in place' - this is the correct answer. Claims against warranties can be made up to six years from the date the contract is breached. Option 2 isn't correct as a breach in warranty does not allow you to rescind the contract. Options 3 and 4 are incorrect because Alan CAN claim damages. There's a useful table about warranties and conditions on p. 127

Question 2

Which of the following conflict resolution styles may involve a private caucus and a joint ses-sion?

Amediation

Badjudication

Cnegotiation

Dlitigation

Answer : A

This is Mediation. The private caucus is when each of the parties meets in private with the media-tor, this is usually after a joint session between the three parties. See p.71 for more information on mediation

Question 3

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

Asmall breach

Bminor breach

Cmajor breach

Dwarranty breach

Answer : B

This is a minor breach. This is the definition as given in the study guide on p. 48

Question 4

Dianne has a loan agreement which contains a clause for default. What does a clause for default imply?

Athis allows the lender to demand overdue payments are made straight away

Bthis allows a lender to demand payment from a guarantor if the borrower is unable to pay

Cthis allows the lender to declare insolvency

Dthis allows the lender to demand full payment of the outstanding balance

Answer : D

A Clause for Default 'allows the lender to demand full payment of the outstanding balance'. See p.102. And always read the small print before you sign a loan agreement :)

Question 5

Penguin Ltd has a contract with Blue Company. Blue Company has just broken a warranty in the contract. What remedies does Penguin Ltd have available?

Athey can sue and claim damages

Bthey can claim damages and terminate the contract

Cthey can terminate the contract but cannot claim damages

Dthey can claim damages but not terminate the contract

Answer : D

They can claim damages but not terminate the contract. If Blue company has broken a Condition, they would be able to terminate the contract, but this isn't the case for a breach of a Warranty. See p.43 for more details

Question 6

Perry is seeking a resolution to a conflict he has with his supplier. He wants a third party to make a binding and legally enforceable decision and wants the issue to remain confidential. He is considering litigation. Is this the best solution for Perry?

Ayes- litigation is the most appropriate for his requirements

Bno- Perry should try mediation

Cno- Perry should try Adjudication

Dno - Perry should try Conciliation

Answer : C

Perry should try adjudication. Litigation is public so there would be no confidentiality. Out of the four options only adjudication would provide Perry with what he needs; a binding decision which is confidential. See p.146 for more information on litigation.

Question 7

Which of the following will you put into box 8?

ACondition

BWarranty

CInnominate Term

Answer : C

The correct answers are as follows:

This is a condition. Again the food being organic would be fundamental to the contract as the health of the llamas depend on it.

This is arbitration as it involves a panel.

This is an innominate term as it won't be mentioned in the contract. It won't be until a breach occurs when it is decided whether the issue of subcontracting is a condition or a warranty, and which one it will be, will likely depend on the situation. For example if they subcontract out to a non-organic llama food provider, that would probably be a Condition. If they get help fulfilling an order and the subcontractor is also organic, that's probably a warranty.

CIPS Managing Contractual Risk L5M3 Exam Questions