Managing Contractual Risk (L5M3) Free Practice Test

Question 1

Which of the following will you put into box 5?

A. Litigation

B. Mediation

C. Negotiation

D. Arbitration

Correct Answer: C

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Question 2

Which of the following are advantages to seeking a solution to conflict via litigation?

A. The process is quick and cost-effective

B. There is no confidentiality

C. the process provides certainty that an outcome will be reached

D. The decision can be made by someone who isn't an expert in their field.

Correct Answer: C

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Question 3

Which of the following will you put into box 1?

A. avoid

B. compromise

C. compete

D. collaborate

Correct Answer: B

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Question 4

Terry's Toys is a Toy Manufacturer who has an agreement to provide Toys to an online re-tailer. The retailer has ordered 500 toys from Terry and Terry has incurred costs of £3000 manufacturing the toys. Halfway through production the retailer calls Terry to cancel the order. Terry reads through the contract and sees a liquidated damages clause of £1000. What should Terry do?

A. Terry can apply to the court to increase the liquidated damages to £3000

B. Terry can do nothing and must pay the additional £2000 out of his own pocket

C. Terry can deliver the toys as agreed as there is a contract in place

D. Terry can sue the retailer for the additional costs incurred above the liquidated damages

Correct Answer: B

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Question 5

Which of the following will you put into box 7?

A. Litigation

B. Mediation

C. Negotiation

D. Arbitration

Correct Answer: D

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Question 6

Service Credits are a form of what?

A. liquidated damages

B. Consideration

C. indemnity

D. KPI

Correct Answer: A

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Question 7

Jenny has received a written offer from a supplier. She emails them to clarify if they can do next day delivery. The supplier does not reply. The next day Jenny makes the payment. Has a contract been formed?

A. no- the clarification constitutes a conditional acceptance

B. no- a contract has not been signed

C. yes- a counter offer has been made

D. yes- the supplier made an offer and Jenny accepted it by making a payment

Correct Answer: D

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Question 8

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

A. conciliation

B. negotiation

C. arbitration

D. adjudication

Correct Answer: D

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Question 9

Parky Parks Ltd has a contract with Slides R Us for the provision of children's playground equipment. The contract contains a clause for liquidated damages and puts the figure at £500k. Which of the following statements is correct? Select TWO

A. If damages exceed £500k Parky Parks can apply to the courts to get Slides R Us to pay above this amount

B. liquidated damages is a genuine estimate of loss

C. Damages under the amount of £500k are not required to be paid to Parky Parks

D. Liquidated damages needs to be a 100% accurate figure

E. costs incurred above £500k will be covered by Parky Parks Ltd

Correct Answer: B,E

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CIPS Managing Contractual Risk (L5M3) Free Practice Test