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NEW QUESTION 31
Which of the following will you put into box 1?
- A. Subcontracting
- B. Payment Term
- C. Time is of the Essence
- D. Specification
The correct answers are as follows:
This is 'Time is of the Essence' - failure to deliver the food on time will have consequences.
NEW QUESTION 32
Sam is a factory manager and has purchased a new fixed asset on a loan purchase agreement. There is a forbearance agreement between the Factory and the provider. What does this mean?
- A. the lender agrees to give the breaching party a period of time as an extension by which to meet their obligations
- B. the lender is able to charge interest on the purchase in line with RPI
- C. the lender is able to demand full payment of outstanding balances in case of none pay-ment
- D. the lender requires the buyer to assign a guarantor in case they cannot make payments
1 is the correct answer. This is a direct quote from p. 104 of the study guide.
NEW QUESTION 33
What is the first stage in conflict resolution?
- A. look at remedies available
- B. assess the impact of the breach
- C. decide on the type of conflict resolution approach
- D. identify the nature and source of the conflict
The first stage is 'identify the nature and source of the conflict'. Stage 2 is assess the impact of the breach, stage 3 is look at remedies available and stage 4 is agree on a way forward and type of conflict resolution. These stages are explained on p.62 of the study guide.
NEW QUESTION 34
Which of the following will you put into box 3?
- A. specification
- B. anticipatory breach
- C. fundamental breach
- D. payment terms
The correct answers are as follows:
This is a fundamental breach. The key here is the scenario says 'huge issue'. Out of the four scenarios this one is the most important / serious and therefore will be the fundamental breach.
NEW QUESTION 35
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 do nothing and must pay the additional £2000 out of his own pocket
- B. Terry can sue the retailer for the additional costs incurred above the liquidated damages
- C. Terry can deliver the toys as agreed as there is a contract in place
- D. Terry can apply to the court to increase the liquidated damages to £3000
The correct answer is 4- Terry can do nothing and must pay the additional £2000 out of his own pocket. Liquidated damages are a pre-estimate of loss - they can't be changed by a court and you can't demand the buyer pays any higher than this if you actually lose more than is stated. This is one of the major disadvantages of having liquidated damages. Option 3 is a bad idea- the retailer has communicated that they do not want the toys so Terry is likely to only incur additional costs if he continues manufacturing them and delivers them. See p.106. There are lots of questions like this in the exam. Remember to think what the study guide would say- rather than what would happen in real life. Don't over complicate things.
NEW QUESTION 36