CIPS L4M8 EXAM 2 QUESTIONS AND ANSWERS SET
A+
✔✔Negotiating tactics: Salami - ✔✔The buyer divides the concessions that they are
willing to make on the price into small, 'bite-sized' pieces to discuss with the supplier.
This way the supplier may not realise they are conceding as much as they are
✔✔Negotiating tactics: One last thing - ✔✔The buyer makes one final request of the
supplier, just when agreement is about to be made. At this stage, the supplier is so
close to agreement that they will hopefully agree to the buyers extra requirement
✔✔Negotiating tactics: Russian front - ✔✔Two offers are presented, but one of them will
never be accepted as it is unreasonable. The unreasonable offer is explained first so
that when the second offer is presented, it is much more appealing compared to the first
option
✔✔Negotiating tactics: Mother hubbard - ✔✔The buyer states that the 'cupboard is
empty' and that they cannot offer any more, ie they cannot afford to increase their bid
✔✔Negotiating tactics: Log rolling - ✔✔The buyer presents many requests, where some
have little or no value. When giving concessions, the low-value requests can be
conceded with no negative effect
✔✔Negotiating tactics - ✔✔- Take it or leave it
- Good cop, bad cop
- Salami
- One last thing
- Russian front
- Mother hubbard
- Log rolling
✔✔For a procurement professional to buy goods or services in response to a need, they
sometimes require a bespoke specification.
,Terms for the specifications could include the following - ✔✔- Technical drawings
- Industry standards
- Recipes or formulae
- Brands
- Samples
✔✔Payment terms are the terms of the contract that - ✔✔specify when the buying
organisation should pay the supplying organisation
✔✔Payment terms are expressly written into the contract and are often stated as - ✔✔-
Proforma
- Net 30 days
- Net 45 days
- Net 60 days
✔✔Primary terms are - ✔✔those that relate to products or services being supplied
✔✔Secondary terms are - ✔✔those that relate to payment, damages or failure to
perform
✔✔Warranties are a ....... term - ✔✔secondary
✔✔Warranties are - ✔✔a promise from the supplier to the buyer that the product or
service supplier will meet the agreed specification
✔✔Warranties that are written into the contract are - ✔✔express terms. However if no
warranty is expressly written, the implied terms state that the product or service has to
be fit for purpose
✔✔The advantage of creating an express warranty term is to - ✔✔make sure that the
procurement professionals purchase order is received exactly as required
✔✔A condition within a contract states - ✔✔one or both parties obligations. These are
obligations that are fundamental to the performance of the contract
✔✔The retention of title (RoT) clause in a contract states - ✔✔when ownership transfers
from the supplier to the buying organisation
✔✔The rentention of title clause (RoT) only applies to - ✔✔products
✔✔What is the retention of title clause also known as? - ✔✔Romalpa clause
✔✔Contractual breaches can be classified into three categories - ✔✔- Material
- Anticipatory
, - Fundamental
✔✔Material breach of contract - ✔✔One of the parties fails to perform its agreed
responsibilities and the contract ceases
✔✔Anticipatory breach of contract - ✔✔One party has suggested that it will be unable to
fulfil its obligations and the contract ceases
✔✔Fundamental breach of contract - ✔✔The injured party is so affected by the failure of
performance from another party that the contract ceases
✔✔Liquidated damages - ✔✔a fixed amount of money, agreed between the parties, that
is payable if a contract is breached. They can be enforced by law and the injured party
should not leave to seek action for them to be paid
✔✔Unliquidated damages - ✔✔an unfixed amount of money. The terms are used when
the amount of money that will compensate the injured party cannot be known in
advance. A court decides on the fair amount of unliquidated damages for a breach of
contract
✔✔What are the two types of damage clauses that can be created within a contract? -
✔✔- Liquidated
- Unliquidated
✔✔Advantages of liquidated damages - ✔✔- Pre-agreed amount
- No need for legal intervention
✔✔Disadvantages of liquidated damages - ✔✔Could receive less than the actual
amount loss
✔✔Advantages of unliquidated damages - ✔✔Full amount of loss can be recovered
✔✔Disadvantages of unliquidated damages - ✔✔Has to be awarded through a court
✔✔Exclusion clauses - ✔✔This type of clause is used in contracts to try to eclude one
party, or to restrict the amount of liabilty that might come from a breach of contract, eg,
if the supplier supplied poor quality goods
✔✔Exclusion clauses can also do the following - ✔✔- Restrict or limit liability
- Seek some form of guarantee in place of normal liability for breach of contract
✔✔To be valid, the exclusion clause must pass a two-part common law test - ✔✔1. The
clause must be incorporated into the contract
2. The clause must be constructed in a clear and precise way
A+
✔✔Negotiating tactics: Salami - ✔✔The buyer divides the concessions that they are
willing to make on the price into small, 'bite-sized' pieces to discuss with the supplier.
This way the supplier may not realise they are conceding as much as they are
✔✔Negotiating tactics: One last thing - ✔✔The buyer makes one final request of the
supplier, just when agreement is about to be made. At this stage, the supplier is so
close to agreement that they will hopefully agree to the buyers extra requirement
✔✔Negotiating tactics: Russian front - ✔✔Two offers are presented, but one of them will
never be accepted as it is unreasonable. The unreasonable offer is explained first so
that when the second offer is presented, it is much more appealing compared to the first
option
✔✔Negotiating tactics: Mother hubbard - ✔✔The buyer states that the 'cupboard is
empty' and that they cannot offer any more, ie they cannot afford to increase their bid
✔✔Negotiating tactics: Log rolling - ✔✔The buyer presents many requests, where some
have little or no value. When giving concessions, the low-value requests can be
conceded with no negative effect
✔✔Negotiating tactics - ✔✔- Take it or leave it
- Good cop, bad cop
- Salami
- One last thing
- Russian front
- Mother hubbard
- Log rolling
✔✔For a procurement professional to buy goods or services in response to a need, they
sometimes require a bespoke specification.
,Terms for the specifications could include the following - ✔✔- Technical drawings
- Industry standards
- Recipes or formulae
- Brands
- Samples
✔✔Payment terms are the terms of the contract that - ✔✔specify when the buying
organisation should pay the supplying organisation
✔✔Payment terms are expressly written into the contract and are often stated as - ✔✔-
Proforma
- Net 30 days
- Net 45 days
- Net 60 days
✔✔Primary terms are - ✔✔those that relate to products or services being supplied
✔✔Secondary terms are - ✔✔those that relate to payment, damages or failure to
perform
✔✔Warranties are a ....... term - ✔✔secondary
✔✔Warranties are - ✔✔a promise from the supplier to the buyer that the product or
service supplier will meet the agreed specification
✔✔Warranties that are written into the contract are - ✔✔express terms. However if no
warranty is expressly written, the implied terms state that the product or service has to
be fit for purpose
✔✔The advantage of creating an express warranty term is to - ✔✔make sure that the
procurement professionals purchase order is received exactly as required
✔✔A condition within a contract states - ✔✔one or both parties obligations. These are
obligations that are fundamental to the performance of the contract
✔✔The retention of title (RoT) clause in a contract states - ✔✔when ownership transfers
from the supplier to the buying organisation
✔✔The rentention of title clause (RoT) only applies to - ✔✔products
✔✔What is the retention of title clause also known as? - ✔✔Romalpa clause
✔✔Contractual breaches can be classified into three categories - ✔✔- Material
- Anticipatory
, - Fundamental
✔✔Material breach of contract - ✔✔One of the parties fails to perform its agreed
responsibilities and the contract ceases
✔✔Anticipatory breach of contract - ✔✔One party has suggested that it will be unable to
fulfil its obligations and the contract ceases
✔✔Fundamental breach of contract - ✔✔The injured party is so affected by the failure of
performance from another party that the contract ceases
✔✔Liquidated damages - ✔✔a fixed amount of money, agreed between the parties, that
is payable if a contract is breached. They can be enforced by law and the injured party
should not leave to seek action for them to be paid
✔✔Unliquidated damages - ✔✔an unfixed amount of money. The terms are used when
the amount of money that will compensate the injured party cannot be known in
advance. A court decides on the fair amount of unliquidated damages for a breach of
contract
✔✔What are the two types of damage clauses that can be created within a contract? -
✔✔- Liquidated
- Unliquidated
✔✔Advantages of liquidated damages - ✔✔- Pre-agreed amount
- No need for legal intervention
✔✔Disadvantages of liquidated damages - ✔✔Could receive less than the actual
amount loss
✔✔Advantages of unliquidated damages - ✔✔Full amount of loss can be recovered
✔✔Disadvantages of unliquidated damages - ✔✔Has to be awarded through a court
✔✔Exclusion clauses - ✔✔This type of clause is used in contracts to try to eclude one
party, or to restrict the amount of liabilty that might come from a breach of contract, eg,
if the supplier supplied poor quality goods
✔✔Exclusion clauses can also do the following - ✔✔- Restrict or limit liability
- Seek some form of guarantee in place of normal liability for breach of contract
✔✔To be valid, the exclusion clause must pass a two-part common law test - ✔✔1. The
clause must be incorporated into the contract
2. The clause must be constructed in a clear and precise way
