CIPS L4M3 Commercial Contracting Online Training
CIPS L4M3 Online Training
The questions for L4M3 were last updated at Nov 23,2024.
- Exam Code: L4M3
- Exam Name: Commercial Contracting
- Certification Provider: CIPS
- Latest update: Nov 23,2024
Which of the following is used to detail the complex matter that may be verbiage to the main document?
- A . Contract variation
- B . Schedule
- C . Subcontracting
- D . Standard terms and conditions
B
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
Which of the following is used to detail the complex matter that may be verbiage to the main document?
- A . Contract variation
- B . Schedule
- C . Subcontracting
- D . Standard terms and conditions
B
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
Which of the following is used to detail the complex matter that may be verbiage to the main document?
- A . Contract variation
- B . Schedule
- C . Subcontracting
- D . Standard terms and conditions
B
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
Which of the following is used to detail the complex matter that may be verbiage to the main document?
- A . Contract variation
- B . Schedule
- C . Subcontracting
- D . Standard terms and conditions
B
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
Technical and physical characteristics of the product
- A . 2 and 4 only
- B . 1 and 2 only
- C . 1 and 4 only
- D . 2 and 3 only
D
Explanation:
There are 2 major types of specifications:
Technical and physical characteristics of the product
- A . 2 and 4 only
- B . 1 and 2 only
- C . 1 and 4 only
- D . 2 and 3 only
D
Explanation:
There are 2 major types of specifications:
Technical and physical characteristics of the product
- A . 2 and 4 only
- B . 1 and 2 only
- C . 1 and 4 only
- D . 2 and 3 only
D
Explanation:
There are 2 major types of specifications:
Consequences and actions that arise from certain KPI scores must be…? Select TWO that apply.
- A . Mutually agreed
- B . Deliberately omitted
- C . Documented
- D . Unilaterally imposed by the purchaser
- E . Terminated
A,C
Explanation:
Supplier performance management and monitoring is a fundamental part of contract management. It starts with setting KPIs, targets and consequences or actions that arise from KPI scores. The measures, objectives and targets used in the monitoring of the supplier’s performance must reflect those that were agreed when the contract was let. That is why it is important to specify a commitment to continuous improvement at the outset. It would be unfair to the supplier to suddenly introduce a range of measures after the contract had begun – however if such an introduction mid-term through the contract is unavoidable then it should be negotiated and agreed in a professional manner and not merely imposed on the supplier.
In conclusion, the details of how KPIs will be monitored and the actions or consequences resulting from scores achieved must be documented and agreed between the parties. This details may be embedded in the specification or the main body of the contract or it may be set out in a SLA.
Reference:
– Performance Monitoring of Suppliers – CIPS Knowledge summary
– CIPS study guide page 101-109
LO 2, AC 2.2
Blakenall District Hospital (BDH) is a large hospital that is a major part of the government’s health service. Purchasing staff are in the habit of placing many long-term contracts with suppliers and sub-contractors. Whilst these contracts are usually carried out successfully, prices are often paid that are well over budget. The purchasing manager is concerned to find that, in some cases, members of staff are forcing suppliers to accept fixed price contracts. The policy has caused several problems such as some suppliers refusing to deal with BDH and a few going out of business mid-way through performing a contract with BDH. This is due to fluctuating market prices of materials. The procurement manager suggests supplier to adopt variable pricing arrangement with price index.
Is this a right course of action?
- A . No, variable pricing would only benefit the suppliers
- B . Yes, this type of arrangement would provide absolute certainty when budgeting
- C . Yes, this pricing arrangement would reimburse the fluctuation of material prices
- D . No, price adjustment should be applied to short-term supply contract only (3-month
duration or less)
C
Explanation:
Procurement staff in the Hospital is forcing suppliers into fixed price contract. If the costs generally rise, supplier may operate at a loss. This situation can disrupt the relationship, that is the reason why some suppliers refusing to deal with BDH and a few going out of business mid-way.
Alternative methods could be variable pricing arrangement. This method would reimburse the fluctuation of market price. It will also benefit buyer if the market price drops. This type of arrangement should be applied to long-term contracts (i.e. 18 months or more).
Reference: CIPS study guide page 179-184
LO 3, AC 3.3
Blakenall District Hospital (BDH) is a large hospital that is a major part of the government’s health service. Purchasing staff are in the habit of placing many long-term contracts with suppliers and sub-contractors. Whilst these contracts are usually carried out successfully, prices are often paid that are well over budget. The purchasing manager is concerned to find that, in some cases, members of staff are forcing suppliers to accept fixed price contracts. The policy has caused several problems such as some suppliers refusing to deal with BDH and a few going out of business mid-way through performing a contract with BDH. This is due to fluctuating market prices of materials. The procurement manager suggests supplier to adopt variable pricing arrangement with price index.
Is this a right course of action?
- A . No, variable pricing would only benefit the suppliers
- B . Yes, this type of arrangement would provide absolute certainty when budgeting
- C . Yes, this pricing arrangement would reimburse the fluctuation of material prices
- D . No, price adjustment should be applied to short-term supply contract only (3-month
duration or less)
C
Explanation:
Procurement staff in the Hospital is forcing suppliers into fixed price contract. If the costs generally rise, supplier may operate at a loss. This situation can disrupt the relationship, that is the reason why some suppliers refusing to deal with BDH and a few going out of business mid-way.
Alternative methods could be variable pricing arrangement. This method would reimburse the fluctuation of market price. It will also benefit buyer if the market price drops. This type of arrangement should be applied to long-term contracts (i.e. 18 months or more).
Reference: CIPS study guide page 179-184
LO 3, AC 3.3
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