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CIPS
CIPS Level 3 Advanced Certificate in Procurement and Supply Operations
L3M3
Contract Administration Questions and Answers

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Questions # 1:

In legal parlance, in discussing / negotiating contract terms, something which is 'less than an offer', might be:

Options:

Invitation to tea

Invitation to treat

Consideration

Invitation to accept

Answer

Explanation

'Invitation to treat' is less than an offer ie it is not capable of being accepted in any contractual sense.

A common example given of an invitation to treat are goods on display in a shop window.

Questions # 2:

Conducting individual and group-based (focus groups) in-depth interviews.

Is this quantitative or qualitative data gathering?

Options:

Qualitative

Quantitative

Answer

Explanation

The benefit of in-depth interviews is that one may unearth deeper thoughts, ideas or concerns than through a larger quantitative exercise. Qualitative exercises lend themselves to more freedom to ex-plore interesting issues.

Questions # 3:

A contract clause indicating damages to be recovered in the event of under-performance, with the proposed damages being a genuine pre-estimate of loss, is called a:

Options:

Punitive damages clause

Liquidated damages clause

Penalty clause

Unliquidated damages clause

Answer

Explanation

Liquidated damages clause.

The QUESTION NO: is pretty much a definition of a liquidated damages clause.

Questions # 4:

When a proposal fits with organisational strategy / direction / values, this can be described as:

Options:

Alignment

Adjournment

Accompaniment

Ailment

Answer

Explanation

When a company's goals, resources, plans are aligned we should hope for better performance. And when the employee's values are also aligned, it just gets better.

Questions # 5:

Which STEEPLE factor deals with issues of foreign exchange rates, inflation, consumer spending, labour costs and unemployment levels?

Options:

Economic

Political

Socio-cultural

Environmental

Answer

Explanation

Economic.

I think foreign exchange at least couldn't fit into any other STEEPLE factor, so that's a clincher and it has to be 'economic'.

Questions # 6:

If your organisation takes out insurance cover to address various risks, which one of the following risk management strategies is it adopting?

Options:

Treat

Terminate

Tolerate

Transfer

Answer

Explanation

Transfer.

Some of the risk has been transferred to the insurance company.

Questions # 7:

The letters ‘MEAT’ stand for:

Options:

Most economically advantageous tender

Most environmentally advanced technology

Most environmentally advantageous tender

Main economically advanced tender

Answer

Explanation

MEAT: Most economically advantageous tender

An approach to tendering which takes account not only of the selling price, but also other relevant factors.

Questions # 8:

Transfer of the rights and obligations of a contract onto a third party, is called:

Options:

Assignment

Association

Acceptance

Assignation

Answer

Explanation

Essentially the contract is now between two different parties because one party has assigned the contract to someone else.

It's always a good idea to check whether this is permitted under a contract, otherwise you might finish up doing business with someone you didn't plan to do business with.

Questions # 9:

The price at which suppliers wish to sell and buyers wish to buy; and the market clears, is called the

Options:

Equilibrium price

Opprobrium price

Closing price

Polyvalent price

Answer

Explanation

Equilibrium price.

The closing price is the price at the end of the day when the market closes.

The other 'prices' shown are nonsense.

Questions # 10:

A sum of money credited to a buyer by a seller in recognition of a large volume of purchases bought throughout the previous year might be called a:

Options:

Retrospective rebate

Vendor debit

Historic refund

Retrospective reward

Answer

Explanation

It's a retrospective rebate, and can be a highly significant way of (often hidden) discounting for many businesses - sometimes a 'life-saver'. Something to think about in an open book costing situa-tion - are there rebates to suppliers which are 'forgotten' in discussions?

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