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CIPS Commercial Contracting Sample Questions (Q139-Q144):

NEW QUESTION # 139
Company A based in Canada signed a commercial contract with Company B in Egypt. Both countries are Contracting States to Vienna Convention on Contracts for the International Sale of Goods. The contract states that "The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of Canada". Which of the following set of rules will be applied if dispute between contracting parties occurs?

A. CISG
B. Canada's legal system
C. Egypt's legal system
D. WTO rules

Answer: B

Explanation:
Where the sale of goods is between two businesses in different Contracting States, then it is international and the CISG rules of law automatically apply unless they have been excluded. A contract clause stating that the contract is subject to the legal systems and courts of a particular country overrides or excludes the CISG rules, since the local rules of that country would apply instead.
So the answer should be Canada's legal system.
Reference: CIPS study guide page 49-52
LO 1, AC 1.2

NEW QUESTION # 140
Ellie is a junior buyer and her supplier asks her to use their contract terms for an order. Which of the following are clauses that may be included in the supplier contract that could pose a risk to Ellie's business?
Select TWO that apply.

A. If the contract includes a cash discount for early payment
B. If the contract includes supplier contact details
C. If the contract includes exclusion clauses
D. If the contract lists the full specification
E. If the contract includes a price escalation clause

Answer: C,D,E

Explanation:
Price escalation clauses allow suppliers to raise prices during the contract term, potentially undermining budget control. Exclusion clauses limit or remove the supplier's liability, which could leave the buyer unprotected in case of breach or defects. These clauses present clear risks and require careful review or negotiation.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 3, Section 3.1.3 - Risk in supplier- drafted contracts.

NEW QUESTION # 141
Which of the following is a disadvantage of using input specifications?

A. There is less opportunity for innovation
B. There is no limit to the number of suppliers who can quote
C. It is difficult to assess suitability of each quotation
D. It requires a more proactive approach to monitoring

Answer: A

Explanation:
Input specifications detail exactly how a supplier must provide the service or make the product. While this ensures compliance, it limits the supplier's ability to innovate or offer alternative, potentially more efficient solutions. Performance specifications, in contrast, focus on outputs and encourage innovation.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 2, Section 2.1.3 - Types of specification including input and output-based.

NEW QUESTION # 142
Which of the following statements is FALSE on contracts for the leasing of assets?

A. The party responsible for maintenance, insurance and taxes is subject to negotiation
B. The ownership of leased asset is transferred to the lessee at the end of the period
C. In lease agreement, the possession and right of use of an asset are transferred to the lessee
D. The lessee may bear some risks of ownership, such as the liability to insure the asset

Answer: B

Explanation:
A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. Some characteristics of Leases are:
- The right to use the lessor's asset is granted in exchange for a fee called the lease payment.
- The lease payments are usually paid in installments.
- Leases may be long- or short-term.
- At its inception a lease agreement constitutes a mutually unperformed contract Though the ownership of the asset is not transferred to the lessee, some responsibilities and risks do. The lessor and lessee may negotiate on who is responsible on maintenance, insurance, etc.
Reference:
LO 1, AC 1.3

NEW QUESTION # 143
Since services are intangible, so KPIs for services must be qualitative in all circumstances. Is this statement correct?

A. Yes, the only measure mattered to supply of services is end-users' satisfaction
B. Yes, quantitative KPIs are limited to timeliness of supply of goods, defective rates and in-full quantities, which are applied to monitor supplier of physical goods
C. No, some KPIs for services are measurable by means of outcome, time and space performed
D. No, KPIs for services must always be quantitative so that they can be measured easily

Answer: C

Explanation:
KPIs are used to monitor supplier's performance. They can be qualitative or quantitative. Of course, service providers can be monitored by quantitative KPIs regarding the outcome achieved (such as uptime in IT contracts), timeliness of deliveries (such as in construction contracts)...
Reference: CIPS study guide page 117-122
LO 2, AC 2.2

NEW QUESTION # 144
......

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James Scott James Scott

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