L4M3 Exam Questions and Answers | Exam-Dumps (Page: 6)

QUESTION: 26

A construction company is undertaking a housing development project. They need lots of bricks and other building materials, but the construction site doesn't have large area for storage of materials. Therefore, the company's suppliers must deliver the building materials with fixed quantity and at fixed time intervals.
What type of contract is used between the construction company and its suppliers?

Framework agreement
Spot transaction
One off contract
Call off contract

Answer(s): D

Explanation:

In the scenario, the contract between the company and its suppliers is continuous rather than one- off. So it cannot be one-off contract or spot purchase. The quantity and time is well known and fixed, this type of contract is known as call-off contract or blanket order.

Reference:

CIPS study guide page 63-64 LO 1, AC 1.3

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QUESTION: 27

Which of the following is the set of principles that enables courts to determine exactly what the written contract says and what that must mean, then the court will uphold that?

Order of precedence
Rules of interpretation
Unfair Contract Act 1977
Rules of contract formation

Answer(s): B

Explanation:

Courts may be called upon to interpret a statute due to disputes over the meaning of a word or phrase contained within a statute. These disputes may arise through a variety of reasons. It has long been held that words are an imperfect means of communication. Omissions may have occurred at the drafting stage, word or phraseology ambiguity, etymological change through time, oversight on specific points, or a failure to adapt legislation to new developments. This may result in the judiciary providing a role in statutory interpretation. Statutory interpretation in its broadest sense is the process of determining the true meaning of a written document. In UK, the Interpretation Act 1978 provides limited scope to assist judges with statutory interpretation in that it only provides standard definitions to common provisions such as a rebuttable presumption that terminology in the masculine gender also include the feminine, and that the singular includes plural. An order of precedence clause sets out the order in which the contract documents take precedence in the event of an inconsistency.
The Unfair Contract Terms Act 1977 (c 50) is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The terms extend to both actual contract terms and notices that are seen to constitute a contractual obligation.

Reference:

- Rules of Statutory Interpretation
- CIPS study guide page 43-46 LO 1, AC 1.2

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QUESTION: 28

Which of the following is regulated by standard ISO 14001?

Energy management
Quality management systems
Environmental management
Information security management

Answer(s): C

Explanation:

ISO has about 22,000 international standards covering a vast range of aspects of product or service quality. Below are some of the most common ISO standards:
- ISO 9001: Quality management system
- ISO 27001: Information security management
- ISO 5001: Energy management
- ISO 14001: Environmental management

Reference:

- ISO 14001:2015 Environmental management systems -- Requirements with guidance for use
- CIPS study guide page 86 LO 2, AC 2.1

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QUESTION: 29

Under general legal principles of contract formation, which of the following will always automatically result in the termination of an offer?
1. Negotiation
2. Rejection
3. Failure conditionality
4. Non-disclosure

3 and 4 only
1 and 4 only
1 and 2 only
2 and 3 only

Answer(s): D

Explanation:

There are a number of ways for an offer to be terminated. They are events that may occur after an offer has been made which bring it to an end so that it can no longer be accepted. An offer is terminated in the following circumstances:
1. Revocation
2. Rejection

3. Lapse of time
4. Conditional Offer (or Failure of Conditionality)
5. Operation of law
6. Death
7. Acceptance
8. Illegality

Reference:

- How Is an Offer Terminated?
- CIPS study guide page 31-32 LO 1, AC 1.2

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QUESTION: 30

Which of the following are likely to be advantages of using invitation to tender? Select TWO that apply:
Short turnaround times

Quick implementation
Driving forward planning culture
Lower administration costs
Reducing risks of bribery and corruption

Answer(s): B,D

Explanation:

Advantages of using invitation to tender may be as below:
No Nepotism: Tenders or bids are evaluated on the basis of certain predetermined criteria, such as price, quality and value for money. In other words, the firm offering the highest quality product or service at the lowest price point would win the contract. As most tender documents are opened and evaluated in a public process, I think that there remains little room for nepotism or favoritism of any kind.
Value for Money: From the perspective of the client, tenders offer the greatest value for the amount of money spent. This is due to the fact that the client can choose from a wide pool of potential suppliers to select the ones that can produce the highest quality product or service at the lowest price point. This allows the company, establishment or organization to save money without having to compromise on quality. Therefore, despite being quite time consuming, tendering is, in my opinion, a profitable long-term process from an organization's point of view.

Encourages Competition: The process of tendering helps promote a competitive market. This is because a number of potential contractors, firms or suppliers get a chance to bid for every project. And because selection depends on quality and price, every bidder tries to reduce operational inefficiencies and redundancies as much as possible in order to lower expenses and improve quality. This entire process encourages healthy competition in the market and prevents complacency and laziness, which in turn provides a boost to innovation and new ideas. Easier Entry: The system of tendering makes it easier and simpler for new firms to enter the market or even a particular industry. This is due to the fact that contracts under this system are awarded on the basis of predetermined, objective criteria. As a result, even a firm that is a new entrant to the market, having no connections or contacts in the industry, can win a prestigious and lucrative contract by providing the highest value for the client's money. This process therefore helps new firms to quickly get a foothold in the market or industry, thus significantly lowering the traditional barriers to entry.

Reference:

- Characteristics and Benefits of the Tendering Process
- CIPS study guide page 6-8 LO 1, AC 1.1

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CIPS L4M3 Exam (page: 6) CIPS Commercial Contracting Updated on: 25-Dec-2025

QUESTION: 26

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QUESTION: 27

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QUESTION: 28

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QUESTION: 29

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QUESTION: 30

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CIPS L4M3 Exam (page: 6)
CIPS Commercial Contracting
Updated on: 25-Dec-2025