Free Managing Contractual Risk Exam L5M3 Exam Practice Test

Which of the following statements about adjudication is true?

• adjudicators are appointed at random and therefore may not have specific knowledge of the subject matter
• the decision making process can be lengthy and expensive
• parties are expected to present their cases in person in front of the adjudicator
• the decision made by the adjudicator is binding and usually communicated within 28 days

Tutu Incorporated has a contract with a software company to provide their IT software. They want to ensure that the supplier pays compensation if there are any issues with service (e.g. the software doesn't work for a day). Which two items would Tutu Incorporated need to include in the contract?

• unliquidated damages
• letter of credit
• service level agreement
• service credit
• insurance

Which of the following is a source of breach in a contract?

• negligence
• liability
• force majeure
• warranty

Which of the following conflict resolution styles involves a strict timeline and is commonly used within the construction industry?

• conciliation
• adjudication
• arbitration
• litigation

Perry is seeking a resolution to a conflict he has with his supplier. He wants a third party to make a binding and legally enforceable decision and wants the issue to remain confidential. He is considering litigation. Is this the best solution for Perry?

• yes- litigation is the most appropriate for his requirements
• no- Perry should try mediation
• no- Perry should try Adjudication
• no - Perry should try Conciliation

If a party is to 'repudiate' a contract, what does this mean?

• the party is cancelling the contract as it is no longer needed
• the party is using the break-clause to end the contract
• the party indicates they no longer intend to fulfil their contractual obligations, usually in response to a breach
• the party gives notice that they anticipate that they will not be able to fulfil their future obligations

Which of these statements about Guarantees are TRUE? Select 2

• A Guarantee is a secondary obligation of a contract
• A guarantor's responsibility is higher than the Principle
• A guarantee is a promise to repair or replace an item within a defined period of time
• A guarantor's responsibility cannot be higher than the Principle

Parky Parks Ltd has a contract with Slides R Us for the provision of children's playground equipment. The contract contains a clause for liquidated damages and puts the figure at 500k. Which of the following statements is correct? Select TWO

• Liquidated damages needs to be a 100% accurate figure
• If damages exceed 500k Parky Parks can apply to the courts to get Slides R Us to pay above this amount
• Damages under the amount of 500k are not required to be paid to Parky Parks
• liquidated damages is a genuine estimate of loss
• costs incurred above 500k will be covered by Parky Parks Ltd

What is the first stage in conflict resolution?

• assess the impact of the breach
• look at remedies available
• identify the nature and source of the conflict
• decide on the type of conflict resolution approach

When there has been a major breach in a contract, the contract will be terminated. Is this statement true?

• yes- the contract will be terminated and damages sought
• yes- the contract must be terminated as there is no means by which the contract could continue after a major breach
• no- the contract can be affirmed by the injured party
• no- the contract can continue if the offending party proves that further breaches won't occur