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CIPS L5M3 Exam (page: 3)
CIPS Managing Contractual Risk
Updated on: 31-Mar-2026

Viewing Page 3 of 25
L5M3 PDF 120 Questions

An exchange of written documents between a buyer and supplier, each detailing their own Terms and Conditions is known as the Battle of the Forms.
Who generally wins the Battle?

  1. The party who issued the first document
  2. The party who issued the last document
  3. The party with the greatest liability
  4. The party who commits a breach

Answer(s): B

Explanation:

The Battle of The forms is won by the party who sends the last form. This is referred to in the study guide as 'the last shot wins'



Logan Gin Distillery is creating a contract for one of its new suppliers. It is a complicated item that they are ordering and if things go wrong, it would have an extremely negative impact on production, and therefore on revenue. However it is impossible to say what the cost of this would be if things were to go wrong.
What type of clause should be included in the contract?

  1. liquidated damages
  2. unliquidated damages
  3. penalty clause
  4. service credit

Answer(s): C

Explanation:

Unliquidated damages would be the best to include as there is no way of identifying a figure for liquidated damages. This would be the safest thing for the buyer to do. P.108 - section on Unliqui- dated Damages.



John is a chocolatier and has a big order of Easter Eggs coming up in April. He also creates chocolates to sell all year round in his shop, but Easter Eggs represent a large proportion of his profits each year. John's chocolate making machine has just broken and he has ordered a new one to be delivered in February. However due to a delay, the manufacturer of the new machine can't deliver until May.
What course of action can John take?

  1. John can claim for loss of his regular earnings but not for the easter eggs
  2. John can claim for the loss of the Easter Eggs but not his regular earnings
  3. John can claim for both the loss of the Easter Eggs and his regular earnings
  4. John cannot claim for any loss as these are in the future and he doesn't know what these would be

Answer(s): C

Explanation:

3 is the correct answer. This question is testing your understanding of 'consequential loss' which is explained on p.109. Consequential loss is where you can claim damages for incidental loss (loss that isn't a direct cause of the breach of the contract, such as future earnings). In this scenario the breach is the late delivery and the incidental damage is John not being able to sell any chocolate in his shop or make his Easter Eggs. There are questions like this in the real exam- remember to think what the textbook would say and don't overthink this. The scenario doesn't always give you a lot of information (for example this doesn't say if there is a contract in place) so think- which of these four options is the most logical and what is this question trying to test me on.



What is a boilerplate clause?

  1. the clause that will take precedent if there are conflicting pieces of information within a contract
  2. a type of warranty
  3. a clause that allows the contract to be modified if both parties are in agreement
  4. a set of clauses that are commercially standard and expected in all contracts

Answer(s): D

Explanation:

This is #4. This exact definition is given on p.116 under the section 'Giving Notice'



Kelly and Chloe have a contract in which Kelly provides MRO supplies to Chloe's manufac-turing business. Kelly has committed a fundamental breach but Chloe has not suffered any loss. Chloe has chosen to terminate the contract. Can she claim damages?

  1. yes- Chloe can claim liquidated damages if these are stated in the contract
  2. yes- Chloe can claim unliquidated damages as the contract is terminating
  3. no- Chloe cannot claim damages as she has not incurred a loss
  4. no - Chloe cannot claim damages as she decided to terminate the contract

Answer(s): C

Explanation:

3 is the correct answer. Damages cannot be claimed is there has not been any loss. This is stated on p. 122



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