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CIPS Certification
L5M3 Exam
CIPS.L5M3.v2023-02-06.q39 Dumps

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Question 26

A breach which is so severe that it goes to the root of the contract is known as what?

A.fundamental breach
B.condition breach
C.major breach
D.essence breach

Correct Answer: A

This is a Fundamental Breach. Fundamental Breach and Major Breach are very similar- they're both really bad and can lead to damages and the termination of the contract. The difference is that a Fundamental Breach is so bad that it goes to the root of the contract - a breach so bad that the contract is basically worthless. For example if you make a contract with a supplier to have potatoes delivered but it turns out they don't sell potatoes, only apples, and they keep sending you apples instead of potatoes. This would be a fundamental breach because its something so fundamental to the contract that there's no point in the contract existing if there's a breach like this. Condition Breach and Essence Breach are made up words- they don't exist. P.44

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Question 27

What is the purpose of a liability clause in a contract?

A.to limit commercial and financial exposure
B.to punish the supplier for poor performance
C.to ensure adherence to legal standards
D.to give an approximate pre-determined value of loss

Correct Answer: A

The purpose of liability clauses is "to limit commercial and financial exposure"- this is a direct quote from p.2. Liability is the amount that a company owes to another party- this is why contracts will focus on limiting their liability as much as possible.

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Question 28

Which of the following will you put into box 7?

A.liability
B.payment terms
C.liquidated damages
D.Contract variation

Correct Answer: D

The correct answers are as follows:

This is a contract variation as they are changing the number of staff and their hours

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Question 29

Which of the following will you put into box 7?

A.Condition
B.Warranty
C.Innominate Term

Correct Answer: A

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.

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Question 30

What is a Prime Contract?

A.A contract between a buyer and main supplier
B.A contract between an end customer and a company which has full responsibility for its performance
C.A contract between a supplier and a subcontractor
D.A contract between a public sector organisation and the taxpayer

Correct Answer: B

"A contract between an end customer and a company which has full responsibility for its perfor-mance" is the correct answer. This is the definition of Prime Contract given on p. 47

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