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CIPS Commercial Contracting Sample Questions (Q109-Q114):

NEW QUESTION # 109
Which of the following clauses addresses fraud, bribery and corruption?
The Company has undertaken commercially reasonable efforts to eliminate Conflict Minerals from each Company Product and any products currently proposed to be manufactured by the Company or on its behalf in the future. "Conflict Minerals" means columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which originate in the Democratic Republic of the Congo or other country the exploitation and trade of which is determined by the United States to be financing conflict in the Democratic Republic of the Congo or other country.

Answer: B

Explanation:
This question is intended to let students know about how contractual clauses regarding ethical issues is constructed. The exam paper may not ask about this.
"Each Party hereby undertakes that, at the date of the entering into force of the Contract, itself, its directors, officers or employees have not offered, promised, given, authorized, solicited or accepted any undue pecuniary or other advantage of any kind in any way connected with the Contract and that it has taken reasonable measures to prevent subcontractors, agents or any other third parties, subject to its control or determining influence, from doing so.": This is a clause addressing fraud, bribery and corruption. It is created to prevent any undue act by contracting parties. You may find other anti-corruption clause samples in this document.
"Nothing in this Agreement shall prevent a Party from utilizing the services of any subcontractor as it deems appropriate to perform its obligations under this Agreement; provided, however, that each Party shall require its subcontractors to comply with all applicable terms and conditions of this Agreement in providing such services and each Party shall remain primarily liable to the other Party for the performance of such subcontractor.": This clause is used to control the subcontracting and subcontractors.
"Customer will be responsible for and shall ensure that while Service Provider employees, agents or contractors are on Customer's premises, all proper and legal health and safety precautions are in place and fully operational to protect such persons.": This clause is used to ensure health and safety standards.
"The Company has undertaken commercially reasonable efforts to eliminate Conflict Minerals from each Company Product and any products currently proposed to be manufactured by the Company or on its behalf in the future. "Conflict Minerals" means columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which originate in the Democratic Republic of the Congo or other country the exploitation and trade of which is determined by the United States to be financing conflict in the Democratic Republic of the Congo or other country.": This is a clause addressing conflict minerals.
Reference:
LO 3, AC 3.2


NEW QUESTION # 110
A buyer and a supplier plan to sign a contract with cost-plus arrangement. If the cost base is $350 and the markup component is 11% then the invoice price will be...

Answer: A

Explanation:
Markup is the percentage between the profit and costs. The cost is $350, markup is 11%. So final price is: 350 + 350x0.11 = 388.5 Reference:
LO 3, AC 3.3


NEW QUESTION # 111
Key performance indicators (KPIs) are used to measure supplier performance. Which of the following are KPIs that may be used? Select THREE that apply.

Answer: B,C,D

Explanation:
KPIs should measure critical areas of supplier performance. Cost management, quality conformance, and timely delivery are all essential, quantifiable metrics used to track efficiency and contract compliance.
Employee attendance and negotiation style are not standard KPIs.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.3.1 - Selecting and applying KPIs in performance management.


NEW QUESTION # 112
In common law, which of the following documents is legally binding without the need for consideration?

Answer: C

Explanation:
In common law (the legal system in which most rules come from case law or precedents, such as UK, US, Australia, etc), the contract is legally binding if it has the following requirements:
- Offer
- Acceptance
- Certainty & Intention to Create Legal Relations
- Consideration & Promissory Estoppel
- Legal capacity
According to these rules, 'Blanket order', 'One-off purchase', and 'Hire purchase agreement' are contractually binding. One of the reason is that they have consideration.
However, there is a type of legal instruments that does not need consideration to be legally binding. They are called 'Deeds'. A deed (anciently "an evidence") is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property. At common law, to be valid and enforceable, a deed must meet several requirements:
- It must state on its face that it is a deed, using wording like "This Deed..." or "executed as a deed".
- It must indicate that the instrument itself conveys some privilege or thing to someone.
- The grantor must have the legal ability to grant the thing or privilege, and the grantee must have the legal capacity to receive it.
- It must be executed by the grantor in presence of the prescribed number of witnesses, known as instrumentary witnesses (this is known as being in solemn form).
- In some jurisdictions, a seal must be affixed to it. Originally, affixing seals made persons parties to the deed and signatures optional, but seals are now outdated in most jurisdictions, so the signatures of the grantor and witnesses are primary.
- It must be delivered to (delivery) and, in some jurisdictions, accepted by the grantee (acceptance).
Reference:
- Deed - Wikipedia
- Formation of the contract
- CIPS study guide page 40
LO 1, AC 1.2


NEW QUESTION # 113
Maximum Score 1
Which of the following are key performance indicators (KPIs) that could be used to monitor the safety of a workplace?
* The number of non-routine maintenance call-outs per month
* The number of orders and deliveries for personal protective equipment (PPE)
* The number of reported accidents and incidents per month
* A calculation of the number of injuries sustained per number of hours worked

Answer: D

Explanation:
Health and safety KPIs normally measure actual safety outcomes:
* Accidents and incidents (3) # key lagging indicator.
* Injury rate per hours worked (4) # standard metric (e.g. LTIFR).Ordering PPE or maintenance calls don' t directly reflect safety performance.
Reference: CIPS L4M3 Commercial Contracting - "KPIs and performance monitoring."


NEW QUESTION # 114
......

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