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CIPS L5M3 Exam Torrent: Managing Contractual Risk – TestValid Test Engine Simulation

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NEW QUESTION 48
If a party is to ‘repudiate’ a contract, what does this mean?

  • A. the party is cancelling the contract as it is no longer needed
  • B. the party is using the break-clause to end the contract
  • C. the party indicates they no longer intend to fulfil their contractual obligations, usually in response to a breach
  • D. the party gives notice that they anticipate that they will not be able to fulfil their future obligations

Answer: C

Explanation:
“the party indicates they no longer intend to fulfil their contractual obligations, usually in response to a breach”. This is the definition of ‘repudiate’ given on p. 128 Before the exam check you understand the difference between repudiate, rescind and revoke. These are all ways contracts can end but are slightly different.

 

NEW QUESTION 49
Mark is a consultant who works with building managers and advises them on how to make their buildings safer. What type of insurance should Mark have?

  • A. Public Liability
  • B. Product Liability
  • C. Property Insurance
  • D. Professional Indemnity

Answer: D

Explanation:
Mark needs professional indemnity insurance. Types of insurance is a known exam topic and the study guide does not cover this particularly well. Types of insurance is mentioned on p.25 but Pro-fessional Indemnity Insurance isn’t really explained and this does come up in the exam. Professional Indemnity Insurance is needed when your job is to give advice to people (like as a Consultant). It’s used for if the advice you give turns out to be bad. For example, if Mark told the building manager he should get ABC Fire Alarm installed, and actually this Fire Alarm doesn’t meet the necessary Health and Safety standards, he could get sued by the building manager. He could then claim on his Professional Indemnity Insurance.

 

NEW QUESTION 50
An exchange of written documents between a buyer and supplier, each detailing their own Terms and Conditions is known as the Battle of the Forms. Who generally wins the Battle?

  • A. The party who issued the last document
  • B. The party who issued the first document
  • C. The party who commits a breach
  • D. The party with the greatest liability

Answer: A

Explanation:
The Battle of The forms is won by the party who sends the last form. This is referred to in the study guide as ‘the last shot wins’

 

NEW QUESTION 51
Logan Gin Distillery is creating a contract for one of its new suppliers. It is a complicated item that they are ordering and if things go wrong, it would have an extremely negative impact on production, and therefore on revenue. However it is impossible to say what the cost of this would be if things were to go wrong. What type of clause should be included in the contract?

  • A. service credit
  • B. unliquidated damages
  • C. penalty clause
  • D. liquidated damages

Answer: C

Explanation:
Unliquidated damages would be the best to include as there is no way of identifying a figure for liquidated damages. This would be the safest thing for the buyer to do. P.108 – section on Unliqui-dated Damages.

 

NEW QUESTION 52
A failure to perform a provision of a contract which does not affect the end performance of the contract is known as what?

  • A. small breach
  • B. major breach
  • C. minor breach
  • D. warranty breach

Answer: C

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

 

NEW QUESTION 53
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