CIPS L4M8 STUDY LATEST QUESTIONS AND
ANSWERS SET A+
✔✔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
✔✔An indemnity clause means - ✔✔the other party will accept liability and risk for any
loss that happens when carrying out the contract and will replace, repair or repay what
the injured party or parties have lost
✔✔Indemnity clauses may include the following - ✔✔- Costs or debts
- Loss or damage to the buyers property due to negligent or defective work
- Business losses experienced due to a suppliers poor professional advice
✔✔The are five ways to terminate a contract - ✔✔- Breach
- Performance
- Prior agreement
- Recission
- Completion
✔✔Contract termination: Performance - ✔✔One party is unable to carry out the agreed
actions
ANSWERS SET A+
✔✔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
✔✔An indemnity clause means - ✔✔the other party will accept liability and risk for any
loss that happens when carrying out the contract and will replace, repair or repay what
the injured party or parties have lost
✔✔Indemnity clauses may include the following - ✔✔- Costs or debts
- Loss or damage to the buyers property due to negligent or defective work
- Business losses experienced due to a suppliers poor professional advice
✔✔The are five ways to terminate a contract - ✔✔- Breach
- Performance
- Prior agreement
- Recission
- Completion
✔✔Contract termination: Performance - ✔✔One party is unable to carry out the agreed
actions
