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CIPS Managing Contractual Risk Sample Questions (Q54-Q59):

NEW QUESTION # 54
What is the first stage in conflict resolution?

• A. decide on the type of conflict resolution approach
• B. identify the nature and source of the conflict
• C. assess the impact of the breach
• D. look at remedies available

Answer: B

Explanation:
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 # 55
GoGo Ltd has contracted Reny Manufacturing to produce a bespoke piece of equipment for them. It is an asset and costs a significant amount of money. A contract is drawn up which states that GoGo Ltd has the right to terminate the contract at any time for any reason. Halfway through production of the asset, GoGo Ltd calls Reny Manufacturing to cancel the order. Reny Manufacturing has incurred many costs already. Can GoGo Ltd cancel the order?

• A. yes- the order has not yet been delivered meaning that GoGo Ltd can cancel- there has been no transfer of ownership
• B. yes- there is a termination clause in the contract
• C. no- the termination clause is unfair
• D. no- Reny Manufacturing will sue for damages

Answer: B

Explanation:
The correct answer is 3 - 'yes there is a termination clause in the contract'. In this scenario it would be immoral for GoGo Ltd to cancel, but it wouldn't be illegal. They have the right to use the clause that's been put into the contract. It's possible that Reny might sue for damages, but this doesn't prevent GoGo Ltd from cancelling the order (they might be okay with paying the damages). There is a very similar question to this in the exam. Termination clauses are discussed on p.134 - I recommend brushing up on this topic before the exam.

NEW QUESTION # 56
A buyer and supplier have a contract and the supplier has committed a major breach. However, as they are the sole supplier to the buyer, the buyer has decided not to terminate the contract and instead to work with the supplier to remedy the situation. What is this called?

• A. awarding damages
• B. affirmation of the contract
• C. assigning liability
• D. conflict resolution

Answer: B

Explanation:
This is affirmation of the contract. When a breach occurs the injured party has two options; termi-nate the contract or affirm the contract. In this example they have affirmed the contract- they have chosen to continue working with the offending party. See p.60.

NEW QUESTION # 57
Which of the following will you put into box 2?

• A. payment terms
• B. fundamental breach
• C. anticipatory breach
• D. specification

Answer: A

Explanation:
The correct answers are as follows:

This is payment terms- the clues here are 'financial' and 'progress payments'

NEW QUESTION # 58
Which of the following statements are TRUE about negotiation? Select THREE

• A. the outcome of the negotiation is public
• B. the process is voluntary
• C. it is a quick and cost effective method to resolve disputes
• D. the process is flexible
• E. the process can involve a neutral third party

Answer: B,C,D

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 # 59
......

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