Which of the following is a key element for the development of a contract?
Correct Answer: A
Scoping specifications are fundamental in the development of a contract as they define the requirements, standards, and expectations for the goods or services to be provided. This clarity ensures that both parties have a mutual understanding of the deliverables, which is essential for a legally binding agreement. While contract management and supplier management are critical post-contract award activities, and budget approval is an internal process, scoping specifications directly contribute to the contract's formation. Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 2, Section 2.1.1 - Drafting of specifications to form a binding legal document.
Question 47
Key performance indicators (KPIs) are used to measure supplier performance. Which of the following are KPIs that may be used? Select THREE that apply.
Correct Answer: B,D,E
KPIs should measure critical areas of supplier performance. Cost management, quality conformance, and timely delivery are all essential, quantifiable metrics used to track efficiency and contract compliance. Employee attendance and negotiation style are not standard KPIs. Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.3.1 - Selecting and applying KPIs in performance management.
Question 48
Various terms are used to qualify a party's obligations under contract. Which of the following gives absolute obligation?
Correct Answer: B
"Shall" denotes a mandatory requirement in contract language and implies absolute obligation. Unlike "reasonable endeavours" or "best endeavours", which indicate a duty to try, "shall" creates a strict, enforceable duty to perform the task specified. Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 3, Section 3.1.2 - Clauses defining performance obligations.
Question 49
Which of the following are NOT covered by CISG? Select TWO that apply:
Correct Answer: B,D
United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention or CISG) Vienna Convention was prepared by by the United Nations Commission on International Trade Law (UNCITRAL) and adopted by a diplomatic conference on 11 April 1980. The Convention was welcomed by several countries from different geographic areas, with different legal and political systems. As of 20 August 2020, the Convention has93 Contracting States. The Convention has proved the effectiveness of an uniform text on international trade law. What CISG covers, and what it does not In the 6 first articles of the Convention, the authors set up the boundaries of its application. First is about where it applies. According to UNCITRAL, the Convention applies to contracts of sale of goods between parties whose places of business are in different States and either both of those States are Contracting States or the rules of private international law lead to the law of a Contracting State. A few States have availed themselves of the authorisation in article 95 to declare that they would apply the Convention only in the former and not in the latter of these two situations. As the Convention becomes more widely adopted, the practical significance of such a declaration will diminish. Finally, the Convention may also apply as the law applicable to the contract if so chosen by the parties. In that case, the operation of the Convention will be subject to any limits on contractual stipulations set by the otherwise applicable law. Second, the Convention has a list of goods that are not subject to its application in Article 2. Article 3 clarifies the differences between manufacturing contracts and sale contract. Third, Article 4 and 5 clearly states what CISG does not covers, including grounds for contract invalidity and liabilities to death or injury of person caused by the the goods Finally, the Convention respects the contractual freedom of the trading parties. Trading parties may select this convention as governing law or select other instrument, such as UPICC or domestic laws. Reference: - Governing law in International Contracts - Would you choose CISG or UPICC (Part 1) - CIPS study guide page 49-52 LO 1, AC 1.2
Question 50
A purchase order can become a contract between supplier and purchaser if it is...?
Correct Answer: B
A purchase order is a document sent from a buyer to a seller, with a request to order a product. The purchase order often has its number, description and quantity of the goods, unit prices and total price, name of issuer, time of delivery, standard terms and conditions, etc. It is effectively an offer to supplier. The purchase order will become a formal contract if supplier accepted it by written notice or by performance (such as deliver the goods to the buyer's premise). Reference: LO 1, AC 1.2
