Latest CIPS L4M3 Free Certification Exam Material with 161 Q&As [Q74-Q90]

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Latest CIPS L4M3 Free Certification Exam Material with 161 Q&As

UPDATED L4M3 Exam Questions Certification Test Engine to PDF

CIPS L4M3 Exam Syllabus Topics:

Topic	Details
Topic 1	Drafting specifications and developing marketdialogue with suppliers Understand the legal issues that relate to the formation of contracts
Topic 2	Recognise types of pricing arrangements incommercial agreements The battle of the forms and precedence of contract terms
Topic 3	Defining contractual performance measures or key performance indicators (KPI) Understand the key clauses that are included informal contracts
Topic 4	Appraise examples of key performance indicators (KPIs) in contractual agreements Analyse the legal issues that relate to the creation of commercial agreements with customers or suppliers
Topic 5	Risks presented by contracting on suppliers terms or through oral contracts Analyse the content of specifications for procurements
Topic 6	Terms that apply to labour standards and ethical sourcing Including social and environmental criteria inspecifications
Topic 7	Compare types of contractual agreements made between customers and suppliers Standardisation of requirements versus increasing the range of products
Topic 8	Cost plus and cost reimbursable pricing arrangements Invitations to treat or invitations to negotiate

NEW QUESTION 74
Which of the following can be considered as implied terms in a contract?
1. Case law
2. Statute
3. Trade custom
4. A term can never be implied, it must always be expressed by the parties

1,3 and 4 only

1, 2 and 3 only

1, 2 and 4 only

2, 3 and 4 only

NEW QUESTION 75
Which of the following standards gives guidance on the layout and preparation of specifications?

BS EN 60601-1-11:2015

BS 5864:2019

BS 5975:2019

BS 7373-1:2001

NEW QUESTION 76
Under a framework agreement, which of the following are supplier selection mechanisms? Select TWO that apply:

Rescission of contract

Mini competition

Contract for lease

Direct call-off

Call off contract

A framework agreement is an agreement with one or more suppliers/providers which sets out terms and conditions under which individual contracts (call-offs) can be made throughout the term of the agreement.
A framework agreement itself is not a contract, but the call-offs made from it are.
Framework arrangements create a streamlined and flexible process for procuring goods, works or services Where a framework for the same goods, works or services is awarded to several suppliers, there are three possible options for awarding call-off contracts: direct award (or direct call-off), mini-competition or a combination of both.
Option 1 – Apply the terms of the framework agreement (direct award).
Where your requirements match the terms and/or specification of the framework agreement (in the event of any query, you should clarify the situation with the organisation that established the framework), a particular call-off should be awarded without re-opening competition. The call-off should be awarded to the provider who is identified as the most economically advantageous tender based on the award criteria used at the time that the framework was established (i.e. the supplier ranked no. 1). Randomly selecting a supplier off a framework is not permitted.
Option 2 – Hold a mini-competition between capable suppliers.
If your requirements do not match the terms and/or the specification of the framework, you should conduct a mini-competition exercise. Whilst it is not permitted to substantially change the basic terms or specification of the framework, in running a mini-competition it is possible to supplement or refine the basic terms of the framework prior to making a call-off. Examples of such terms are:
– The particular goods/services/works required;
– Particular delivery timescales;
– Particular invoicing arrangements and payment profiles;
– Associated services such as installation, maintenance and training;
– Quantity;
– Functional specification.
Under no circumstances should brand names or brand-specific descriptions of goods be used e.g. BIC Biro Pen, Hewlett-Packard Printer, Dell computer. Descriptions should give reference to the characteristics and outputs of the product or service. Where no other description is possible, any reference should be qualified by adding the words ‘or equivalent’.
When a mini-competition exercise is held, all suppliers appointed to the framework that are capable of meeting the requirement must be invited to submit a tender. (This might just relate to suppliers within a particular ‘lot’). You must not limit the mini-competition exercise to selected providers. A time limit for submitting the tender must be set and advised to competing suppliers. This time limit must be reasonable, taking account of the complexity of the requirement.
The call-off must be awarded on the basis of the framework award criteria and new criteria cannot be added, although, where permitted, the weightings may be varied to take account of a particular requirement. However, in adjusting the weightings, care must be taken to ensure that any such changes do not have an adverse effect on competition.
Option 3 – Combination of direct award and mini-competition
To use a combination approach, the procurement documents must state that this route may be used. The procurement documents will also specify which terms may be subject to the re-opening of competition.
Reference:
– Guidance on the Use of Framework Agreements
– CIPS study guide page 60-62
LO 1, AC 1.3

NEW QUESTION 77
Which of the following is the term that describes an item bought for a single and non-recurring use or purpose?

Call-off purchase

Ad-hoc purchase

Operational purchase

Stock purchase

NEW QUESTION 78
Which of the following statements is true about model form of contract?

When model contracts are employed, there are no requirements for legal advice and input

Model contract form’s standard clauses often contain correct legal terminology without recourse to third party experts.

The standard clauses of model contract forms give the offeror legal advantages over the offeree

Only the publishers of model forms of contract can edit the clauses of these forms

NEW QUESTION 79
Which of the following is the best definition of “ultra vires”?

Beyond powers

In good faith

From one party

Let the buyer beware

NEW QUESTION 80
Which of the following are among five ‘pillars’ of information assurance?
1. Recovery plan
2. Availability
3. Non-repudiation
4. Governance

2 and 3 only

1 and 2 only

1 and 4 only

3 and 4 only

Information Assurance (IA)
Information Assurance (IA) is the practice of managing information-related risks and the steps involved to protect information systems such as computer and network systems. The IA transformation is a partnership that stretches across the Department of Defense (DoD), Office of National Intelligence, Committee on National Security Systems, National Institute of Science and Technology (NIST), and the Office of Management and Budget.
The US Government’s definition of information assurance is:
“measures that protect and defend information and information systems by ensuring their availability, integrity, authentication, confidentiality, and non-repudiation. These measures include providing for restoration of information systems by incorporating protection, detection, and reaction capabilities.” Information Assurance (IA) is essentially protecting information systems, and is often associated with the following five pillars:
– Integrity
– Availability
– Authentication
– Confidentiality
– Nonrepudiation
The following pillars can be applied in a variety of ways, depending on the sensitivity of the information, or information systems within your organization. Currently, these five pillars are used at the heart of the US Governments ability to conduct safe and secure operations in a global environment.
1. Integrity
Integrity involves assurance that all information systems are protected and not tampered with. IA aims to maintain integrity through means such as anti-virus software on all computer system, and ensuring all staff with access to know how to appropriately use their systems to minimize malware, or viruses entering information systems.
2. Availability
Availability simply means those who need access to information, are allowed to access it. Information should be available to only those who are aware of the risks associated with information systems.
3. Authentication
Authentication involves ensuring those who have access to information, are who they say they are. Ways of improving authentication involve methods such as two-factor authentication, strong passwords, bio-metrics and other devices. Authentication may also be used to not only identify users, but also other devices.
4. Confidentiality
IA involves the confidentiality of information, meaning only those with authorization may view certain data. This step is closely mirrored by the six data processing principles of the General Data Protection Regulation (GDPR), where by personal data must be processed in a secure manner “using appropriate technical and organizational measures” (“integrity and confidentiality”).
5. Nonrepudiation
The final pillar simply means someone with access to your organizations information system cannot deny having completed an action within the system, as there should be methods in place to prove that they did make said action.
Reference:
– What is Information Assurance (IA)?
– CIPS study guide page 99-100
LO 2, AC 2.1

NEW QUESTION 81
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

NEW QUESTION 82
Which of the following documents are likely to have legal standing? Select TWO that apply:

Quotation

Request for information

Tender

Requisition

Estimate

NEW QUESTION 83
Which of the following is always an advantage of using fixed price arrangement in a contract for buying organisation?

Buyer can allocate budget with certainty

Buyer can harness falling market price

Supplier always receives a fixed margin

Suitable for contracts that last 5 years or more

NEW QUESTION 84
Which of the following should be applied when measuring frequency of on-time deliveries during a contract period?

Qualitative assessment

Numerical measure

Binary measure

Subjective measure

NEW QUESTION 85
To expand its operation, Steel Co. decides to build a new plant. Despite of excitement, the senior management is very concerned about the complexity and risks of such project. Hugo, the procurement manager, suggests that the company can adopt a model form of contract. What is the advantage of using model form of contract?

It shifts the balance of power in the favour of the buyer rather than the contractor

The company could avoid the need to draft a complex contract from blank

Model form of contract eliminates the need for legal advice totally

The company does not need to draft the drawings as well as specification anymore

NEW QUESTION 86
Royal Naval Hospital at Rockstown, Anyport manages a fleet of nine ambulance vehicles. During busy periods, it becomes very difficult to keep track of the location of each ambulance (and the nature of their journey). Continual problems lead to the proposal for a new control system (ERNS).
For this ERNS project, the procurement department has drafted a specification in which only a bullet point list of basic requirements was written down. The procurement manager understands that the specification should be developed more specifically but a cross functional team from the Hospital could not do that. A senior buyer suggests that some of Hospital’s pre-qualified suppliers could support them in developing the specification.
Which of the following should be a priority approach of procurement department in developing dialogue with those suppliers about specification development?

Internal discussion

General networking

One-to-one meeting with the suppliers

Request for quotation from the suppliers

NEW QUESTION 87
Bandpro is a reseller of branded computer products to the private and public sector. The procurement team must purchase 500 items each day solely by multiple phone calls and emails to suppliers. Due to this practice, it takes a lot of time to track and collect relevant documents. Some important documents even get lost, which makes procurement audit more burdensome. Which of the following would increase the robustness of audit trails in procurement activities?

Every evidence must be recorded by paper

Adopt e-procurement

Spend less time on auditing procurement procedures

Rectify non-compliant activities

NEW QUESTION 88
Which of the following is a key feature of liquidated damage clauses?

The amount of damage is predetermined

Liquidated damage is a penalty

The amount of liquidated damages must be exceptionally larger than the actual damages incurred

The liquidated damages are non-negotiable

Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. It is a provision that allows for the payment of a specified sum should one of the parties be in breach of contract.
Understanding Liquidated Damages
Liquidated damages are meant as a fair representation of losses in situations where actual damages are difficult to ascertain. In general, liquidated damages are meant to be fair, rather than punitive.
Liquidated damages may be referred to in a specific contract clause to cover circumstances where a party faces a loss from assets that do not have a direct monetary correlation. For example, if a party in a contract were to leak supply chain pricing information that is vital to a business, this could fall under liquidated damages.
A common example is a design phase for a new product that may involve consultation with outside suppliers and consultants in addition to a company’s employees. The underlying plans or designs for a product might not have a set market value. This may be true even if the subsequent product is crucial to the progress and growth of a company. These plans may be deemed to be trade secrets of the business and highly sensitive. If the plans were exposed by a disgruntled employee or supplier, it could greatly hamper the ability to generate revenue from the release of that product. A company would have to make an estimation in advance of what such losses could cost in order to include this in a liquidated damages clause of a contract.
Limitations of Liquidated Damages
It is possible that a liquidated damages clause might not be enforced by the courts. This can occur if the monetary amount of liquidated damages cited in the clause is extraordinarily disproportional to the scope of what was affected by the breached contract.
Such limitations prevent a plaintiff from attempting to claim an unsubstantiated exorbitant amount from a defendant. For instance, a plaintiff might not be able to claim liquidated damages that amount to multiples of its gross revenue if the breach only affected a specific portion of its operations. The concept of liquidated damages is framed around compensation related to some harm and injury to the party rather than a fine imposed on the defendant.
The courts typically require that the parties involved make the most reasonable assessment possible for the liquidated damages clause at the time the contract is signed. This can provide a sense of understanding and reassurance of what is at stake if that aspect of the contract is breached. A liquidated damages clause can also give the parties involved a basis to negotiate from for an out-of-court settlement.
Reference:
– Liquidated Damages
– CIPS study guide page 158-159
LO 3, AC 3.2

NEW QUESTION 89
Which of the following is used to detail the complex matter that may be verbiage to the main document?

Contract variation

Schedule

Subcontracting

Standard terms and conditions

NEW QUESTION 90
A manufacturing company signed a contract with a raw material supplier. The contract includes a clause on liquidated damages in case of late delivery. Purchaser was obliged to pay after 30 days from delivery. Eventually raw material was delivered 1 week later than initial plan due to supplier’s slow production process. There is no defect in the delivered batch. Which of the following can be claimed by the manufacturing company?

Rights to refunds or repairs

Right of set-off

Right of third party

Right of extending payment

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CIPS L4M3 Exam Syllabus Topics:

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