CIPS L5M3 Exam Practice Test Instant Access

Question 1

ABC has a contract with its supplier DEF who delivers pasta to ABC's manufacturing plant. DEF has committed a breach and conflict resolution has taken place. The Court has awarded ABC 'specific performance' damages. What could this involve?

ADEF must pay money to ABC as stated in the liquidated damages clause

BDEF must pay an amount of money as determined by the courts

CDEF must deliver the pasta required by ABC

DDEF must rescind the contract

Answer : C

DEF must deliver the pasta required by ABC is the correct answer. Specific performance is when the innocent party is rewarded by receiving what was initially negotiated - in this case the delivery of pasta. It's basically a posh way of saying that the court mandates you to do what the contract says. See p. 129 for information on Specific Performance.

Question 2

Buyer A and Supplier B have had a disagreement regarding a breach in the contract. They are looking to resolve the issue via arbitration. Which of the following is true about arbitration?

Athe outcome is binding and enforceable

Bthere are strict rules and processes to follow

Cthe arbitrator's role is to facilitate dialogue

Dthe outcome will set a legal precedent

Answer : A

The outcome is binding and enforceable is the correct answer. However the ruling can be appealed. Arbitration is a flexible approach, and the outcome doesn't set legal precedent. The role of the arbitrator is to reach a decision, only in mediation is the role of the third party to facilitate dialogue rather than reach a decision. See p.80 for more information on arbitration.

Question 3

In which conflict resolution method is communication predominately written rather than spoken?

Anegotiation

Badjudication

Carbitration

Dconciliation

Answer : B

Adjudication is written. The other conflict resolution methods involve talking to the other person, or presenting arguments orally to a judge. See p.77 for more info.

Question 4

Which of the following conflict resolution styles involves a strict timeline and is commonly used within the construction industry?

Aconciliation

Badjudication

Carbitration

Dlitigation

Answer : B

Adjudication has strict timescales (this is one of the advantages of using this conflict resolution method). It has roots in the construction industry and has been widely used since the 1990s. See p.76 for more information

Question 5

Conciliation differs from mediation in which of the following ways?

Amediation is voluntary and conciliation is mandatory

Bmediation is cheaper than conciliation

Cthe outcome of mediation is not binding and the outcome of conciliation is binding

Dthe mediator has no decision making power but a conciliator can provide recommen-dations

Answer : D

The true statement is 'the mediator has no decision making power but a conciliator can provide recommendations'. The other statements are false; both processes are voluntary, cheap and non-binding.

Question 6

If an innocent party wishes to terminate a contract due to a breach, which of the following is true?

Aonly future obligations of the parties are excused and discharged

Ball obligations of the innocent party are excused and discharged

Call obligations of the offending party are excused and discharged

Donly past obligations of the parties are excused and discharged

Answer : A

The correct answer is 'only future obligations of the parties are excused and discharged' - all cur-rent and past obligations need to be fulfilled, or remedied (e.g. through liquidated damages). When an innocent party terminates a contract, they are still obliged to fulfil their own obligations. P.47

Question 7

Tyrone Enterprises has just come out of a meeting with one of its suppliers Bob. The meeting has not gone well and the contract has become frustrated. What does this mean?

ANegotiations between the buyer and supplier have failed and dispute resolution will need to take place

Bthe supplier has committed a major breach and is unable to fulfil the contract

Ca situation has occurred which means that the contract can no longer be performed

DThe buyer no longer requires the supplier but is tied into the contract

Answer : C

Frustrated is when 'a situation has occurred which means that the contract can no longer be per-formed'. The situation is one which is outside of the control of either party and its no one's fault that this has happened. A common example of this is when contracts were unable to be performed due to Covid-19 and the national lockdown. The government mandated everyone 'stay at home' and therefore some business contracts were unable to be fulfilled, and were therefore 'frustrated' (for example the delivery of popcorn to cinemas- the cinemas were told by the government to close so the popcorn couldn't be delivered. This wasn't anyone's fault). See p. 47 for more information on Contract Frustration

CIPS L5M3 Managing Contractual Risk Exam Practice Test