[Jan-2023] Download Real CIPS L5M3 Exam Dumps Test Engine Exam Questions
New L5M3 exam dumps Use Updated CIPS Exam
NEW QUESTION 70
Which of the following will you put into box 7?
- A. litigation
- B. mediation
- C. arbitration
- D. adjudication
Answer: A
Explanation:
The correct answers are as follows:
This is litigation as it involves a legal team and it's public. Out of the 4 options only litigation is a public dispute resolution.
NEW QUESTION 71
Alan has an ongoing contract with a supplier for the provision of gardening tools to his horti-culture business. He has been working with the supplier for over 20 years and has recently discovered that the supplier committed a breach in a warranty 3 years ago. Can Alan claim damages?
- A. no- Alan could only claim if the breach was of a condition, not a warranty
- B. yes- Alan can claim damages and rescind the contract
- C. yes- the breach has occurred and a contract is in place
- D. no- Alan cannot claim because the breach was so long ago
Answer: C
Explanation:
"Yes- A Breach has occurred and a contract is in place" - this is the correct answer. Claims against warranties can be made up to six years from the date the contract is breached. Option 2 isn't correct as a breach in warranty does not allow you to rescind the contract. Options 3 and 4 are incorrect because Alan CAN claim damages. There's a useful table about warranties and conditions on p. 127
NEW QUESTION 72
When a contract becomes 'crystalised' what does this mean?
- A. the contract has been terminated
- B. a dispute has arisen which qualifies for resolution by adjudication
- C. a fundamental breach has occurred
- D. a minor dispute has occurred and has been resolved between the parties
Answer: B
Explanation:
Crystalised means ' a dispute has occurred which qualifies for resolution by adjudication'. This is a direct quote from p. 144
NEW QUESTION 73
Which of these statements about mediation is true? Select TWO
- A. mediation is flexible
- B. mediation produces legal precedents
- C. mediation can be used as a stalling tactic
- D. mediation is expensive
- E. mediation involves a third party who makes a judgement on the issue
Answer: A,C
Explanation:
The correct answers are 1 and 3. The other options are false; Mediation does not produce legal precedents- only litigation can do this. Mediation is a cheap dispute resolution option (much cheaper than arbitration or litigation) and the third party has no authority on the matter- they are there as a facilitator of dialogue, not to make a judgement. For more information on mediation see p.74
NEW QUESTION 74
R3D3 is a computer manufacturer who has had an issue with their supplier. They are seeking a conflict resolution approach which is flexible but will provide a binding and enforceable outcome. They would like the resolution to be confidential and directed by an independent third party that is appointed for them. Which of the following would be the best conflict resolution for them to select?
- A. negotiation
- B. litigation
- C. mediation
- D. arbitration
Answer: D
Explanation:
Arbitration ticks all of the boxes required by R3D3. Mediation isn't correct because it's not binding. Negotiation isn't correct because there's no 3rd party. Litigation isn't correct because it's not confidential. See p. 80 for more on arbitration.
NEW QUESTION 75
Which of these statements about Guarantees are TRUE? Select 2
- A. A guarantee is a promise to repair or replace an item within a defined period of time
- B. A guarantor's responsibility cannot be higher than the Principle
- C. A guarantor's responsibility is higher than the Principle
- D. A Guarantee is a secondary obligation of a contract
Answer: B,D
Explanation:
"A Guarantee is a secondary obligation of a contract' and 'A guarantor's responsibility cannot be higher than the Principle' are the correct answers. Guarantees are explained on p.28. Be careful not to confuse this with Warranty. A promise to repair or replace an item within a defined period of time is the definition of a warranty. That was put in there to trick you. Sorry. Remember a Guaran-tee is to do something when the Principle of the contract fails to do it. It's most common in leasing agreements- if you're a young person, you'll often need a responsible adult / parent to sign the lease as your Guarantor. As a Guarantor, they promise to pay the rent if you're unable to. Legally they can't be asked to do any more than you are assigned to do in the contract. So if your rent is £500 a month, that's all they can be asked to pay if you don't pay it. The primary obligation is between you and the landlord. The secondary obligation is between the guarantor and you.
NEW QUESTION 76
Perry is seeking a resolution to a conflict he has with his supplier. He wants a third party to make a binding and legally enforceable decision and wants the issue to remain confidential. He is considering litigation. Is this the best solution for Perry?
- A. no - Perry should try Conciliation
- B. no- Perry should try mediation
- C. no- Perry should try Adjudication
- D. yes- litigation is the most appropriate for his requirements
Answer: C
Explanation:
Perry should try adjudication. Litigation is public so there would be no confidentiality. Out of the four options only adjudication would provide Perry with what he needs; a binding decision which is confidential. See p.146 for more information on litigation.
NEW QUESTION 77
Which of the following will you put into box 1?
- A. avoid
- B. compromise
- C. compete
- D. collaborate
Answer: B
Explanation:
The correct answers are as follows:
The answer is compromise as they're seeking a solution that will satisy everyone.
NEW QUESTION 78
Which of the following conflict resolution styles may involve a private caucus and a joint ses-sion?
- A. negotiation
- B. mediation
- C. litigation
- D. adjudication
Answer: B
Explanation:
This is Mediation. The private caucus is when each of the parties meets in private with the media-tor, this is usually after a joint session between the three parties. See p.71 for more information on mediation
NEW QUESTION 79
What is the purpose of a liability clause in a contract?
- A. to give an approximate pre-determined value of loss
- B. to ensure adherence to legal standards
- C. to limit commercial and financial exposure
- D. to punish the supplier for poor performance
Answer: C
Explanation:
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.
NEW QUESTION 80
When there has been a major breach in a contract, the contract will be terminated. Is this statement true?
- A. yes- the contract will be terminated and damages sought
- B. no- the contract can continue if the offending party proves that further breaches won't occur
- C. yes- the contract must be terminated as there is no means by which the contract could continue after a major breach
- D. no- the contract can be affirmed by the injured party
Answer: D
Explanation:
"no- the contract can be affirmed by the injured party" is the correct answer. When there is a breach in a condition, one of two things can happen; the contract is terminated, or the contract is affirmed. The injured party has the choice of whether or not they want to continue working with the other party and this is called 'affirmirmation of the contract'. The contract doesn't HAVE to be terminated in the case of a major breach so options 1 and 2 are incorrect. Option 4 is also incorrect- the contract can continue even if the offending party says they'll commit further breaches - it's completely up to the injured party whether they want to continue working with them or not. See p. 46 for further details
NEW QUESTION 81
Which of the following is usually the default method for resolving disputes?
- A. conciliation
- B. litigation
- C. mediation
- D. negotiation
Answer: D
Explanation:
Negotiation is usually the default method for resolving disputes. This is a direct quote from p.63
NEW QUESTION 82
Fishfingers Ltd has a contract with a supplier of cod. When the contract was set up it was not known how important specific delivery times would be for the arrival of the fish. After several months it has now become apparent that delivering the fish within 3 hours of them being caught is fundamental to the contract as delayed delivery results in poorer quality Fish Fingers. When the contract was set up what was the delivery times?
- A. an innominate term
- B. a time is of the essence clause
- C. a warranty
- D. a condition of the contract
Answer: A
Explanation:
An Innominate Term is the correct answer. At the time the contract was written, we didn't know how important the delivery time was - therefore it wasn't a condition or a warranty- it was an innominate term. An innominate term is a term that is difficult to classify at the time of drafting a contract. A time is of the essence clause would be a good thing to include in this contract now that we know how important the delivery times are. For more information on Conditions, Warranties and Innominate Terms see p. 43
NEW QUESTION 83
Sarah is a baker and orders free-range eggs from a local supplier which she uses to make cakes. There is a contract in place which included a specification that states that the eggs must be free-range. One day the supplier delivers eggs which Sarah uses in the cakes. Later she dis-covered that these were not free-range. Sarah believes that the supplier has broken the con-tract. Is this true?
- A. Yes- this is a breach of a condition
- B. Yes- this is a fundamental breach
- C. no- the specification is not a contract document
- D. no - there has been a breach in a warranty
Answer: D
Explanation:
"No- there has been a breach in warranty" is the correct answer. The key to answering this question lies in the fact that the specification in this example is a warranty rather than a condition of the contract. P.45 of the study guide explains that the Sale of Goods Act has implications on whether or not a specification is a condition, warranty or innominate term and it's all about whether the product is in 'good condition' and can be used for its intended purpose. In this example the eggs were used for their intended purpose and were in good condition (or Sarah wouldn't have put them in the cakes). Therefore in this example, the eggs needing to be free-range is a warranty of the contract not a condition. Therefore options A and B are both wrong. Answer C is also wrong because the question mentioned that the specification was included in the contract. If you want to know more about the implication of the Sale of Goods act on specifications see p.45.
NEW QUESTION 84
Which of the following are a suitable course of action to take in the event of a minor breach of a contract? Select TWO
- A. liquidated damages
- B. collaboration
- C. litigation
- D. progress meetings
- E. adjudication
Answer: B,D
Explanation:
In the event of a minor breach, CIPS says it is best to work with the defaulting party by conducting progress meetings and collaboration. This is on p. 50 of the study guide
NEW QUESTION 85
Which of the following will you put into box 4?
- A. fundamental breach
- B. payment terms
- C. anticipatory breach
- D. specification
Answer: D
Explanation:
The correct answers are as follows:
This is the specification as it talks about types of fabric.
NEW QUESTION 86
Which of the following will you put into box 6?
- A. Contract variation
- B. liquidated damages
- C. payment terms
- D. liability
Answer: B
Explanation:
The correct answers are as follows:
The answer is liquidated damages as they're seeking compensation for loss.
NEW QUESTION 87
Robert has a contract with Farmer Ted who provides his manufacturing firm with potatoes. There is a contract in place, signed by both parties that Ted will deliver 2 tonnes of potatoes per week. Due to changes in demand, Robert would like Ted to start providing 3 tonnes of potatoes every three weeks. What must be in place for this change to occur?
- A. a variation clause and a signed agreement by both parties
- B. a notification of change and adequate compensation
- C. a notification of change and indemnity
- D. a variation clause and a new liquidated damage fee
Answer: A
Explanation:
A variation clause and signed agreement by both parties is required to make the change. See p.16-17 for more information on contract variations. Note a 'notification of change' isn't valid unless it's accepted by the other party- so it's a good idea for both parties to sign to say they agree to the change.
NEW QUESTION 88
Which of the following would be included in a contract to assign costs and responsibilities be-tween buyer and seller when products are delivered?
- A. Liability
- B. Liquidated Damages
- C. Incoterms
- D. Indemnity
Answer: C
Explanation:
Incoterms assign costs and responsibilities about when products are delivered. See p. 37 for a full list of the different Incoterms. You don't need to know all Incoterms for the exam, but it's a good idea to know what they are and why they'd be put into a contract
NEW QUESTION 89
Which of the following statements are TRUE about negotiation? Select THREE
- A. the process can involve a neutral third party
- B. the outcome of the negotiation is public
- C. the process is voluntary
- D. it is a quick and cost effective method to resolve disputes
- E. the process is flexible
Answer: C,D,E
Explanation:
The correct answers are 1, 4 and 5. Negotiation does NOT involve a third party and the outcome is private / confidential. See p.63 for more information on negotiation
NEW QUESTION 90
Which of the following statements about adjudication is true?
- A. the decision making process can be lengthy and expensive
- B. adjudicators are appointed at random and therefore may not have specific knowledge of the subject matter
- C. the decision made by the adjudicator is binding and usually communicated within 28 days
- D. parties are expected to present their cases in person in front of the adjudicator
Answer: C
Explanation:
The true statement is 'the decision made by the adjudicator is binding and usually communicated within 28 days'. The other three are false- adjudicators are usually experts in their field, the decision making process has a tight timescale and parties present their arguments in writing. This is the only written conflict resolution method.
NEW QUESTION 91
When considering consequential loss, can a cap be placed on the amount claimed?
- A. yes- this is known as a pre-estimate of damages
- B. yes- this is known as a limitation of liability clause
- C. no- there can be a cap to direct loss but not to consequential loss
- D. no- there can be no cap to either direct loss or consequential loss
Answer: B
Explanation:
Yes- this is known as a limitation of liability clause. See p. 112 for more details
NEW QUESTION 92
Which of the following would constitute an offer? Select TWO:
- A. a display in a shop window
- B. an auction
- C. a bid on an auction
- D. a price proposal that is valid for 14 days
- E. an advert on a website
Answer: C,D
Explanation:
Offers include bids on an auction and a price proposal that is valid for 14 days. The other three options are Invitations to Treat. See p.3 for the full list of what constitutes an Invitation to Treat. The tricky thing here is that an auction is an invitation to treat but a bid on an auction is an offer. An auction is an ITT because you're encouraging people to make an offer to you. A bid on the auction is the offer (you offer to buy something at a price you propose).
NEW QUESTION 93
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