Free Managing Contractual Risk Exam L5M3 Exam Practice Test

Harry is negotiating a contract for a new IT system for his business. He is investing heavily in the system and wants the system to be able to provide the services he requires for the next 10 years. However he is aware that technology is changing quickly and would like to include a clause in the contract to ensure that the system he is purchasing is useable for the next 10 years. What should Harry include in the contract?

• limitation of liability
• service credits
• benchmarking
• change control

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

• conciliation
• adjudication
• arbitration
• litigation

A contract term which is difficult to classify at the time of drafting a contract is known as?

• condition
• warranty
• consideration
• innominate

Terry's Toys is a Toy Manufacturer who has an agreement to provide Toys to an online re-tailer. The retailer has ordered 500 toys from Terry and Terry has incurred costs of 3000 manufacturing the toys. Halfway through production the retailer calls Terry to cancel the order. Terry reads through the contract and sees a liquidated damages clause of 1000. What should Terry do?

• Terry can apply to the court to increase the liquidated damages to 3000
• Terry can sue the retailer for the additional costs incurred above the liquidated damages
• Terry can deliver the toys as agreed as there is a contract in place
• Terry can do nothing and must pay the additional 2000 out of his own pocket

Which of the following would constitute an offer? Select TWO:

• a display in a shop window
• an advert on a website
• an auction
• a bid on an auction
• a price proposal that is valid for 14 days

Sally is shopping and sees an advert in a travel agent's window that says that flights to Malta are 50% off. She enters the shop and begins to speak to a travel agent who informs her that the poster she'd seen is out of date. Is the travel agent obliged to give Sally the discounted flight?

• yes- the offer was displayed and therefore must be honoured
• yes- the offer is valid until another offer or counter offer is provided
• no- the offer has been rescinded
• no - the advert is an invitation to treat

Which of the following conflict resolution styles may involve a private caucus and a joint ses-sion?

• mediation
• adjudication
• negotiation
• litigation

Which of the following must a legally binding contract contain? Select THREE

• Intention
• Indemnity
• Consideration
• Liability
• Capacity

Molly is a wedding planner who has just set up as a sole-trader. She has a meeting with a po-tential couple to organise their wedding. The couple is extremely risk adverse and have asked Molly to email them a copy of her insurances. Which insurances should Molly send? Select TWO

• Products Liability Insurance
• Employers Liability Insurance
• Professional Indemnity Insurance
• Public Liability Insurance

Tyrone Enterprises has just come out of a meeting with one of its suppliers Bob. The meeting has not gone well and the contract has become frustrated. What does this mean?

• Negotiations between the buyer and supplier have failed and dispute resolution will need to take place
• the supplier has committed a major breach and is unable to fulfil the contract
• a situation has occurred which means that the contract can no longer be performed
• The buyer no longer requires the supplier but is tied into the contract