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Total 120 questions

Managing Contractual Risk Questions and Answers

Question 1

Which of the following will you put into box 1?

Options:

A.

subcontracting

B.

reputational damage

C.

penalty clause

D.

consequential loss

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Question 2

Kranky Kat Ltd has just been through an adjudication process with a supplier it worked with who committed a breach in the contract. Kranky Kat is not happy with the outcome of the adjudication, what can Kranky Kat do?

Options:

A.

move on to litigation

B.

appeal the decision

C.

nothing - the decision made by the adjudicator is binding

D.

nothing - the decision made by the adjudicator is legally enforceable

Question 3

Alan has an ongoing contract with a supplier for the provision of gardening tools to his horti-culture business. He has been working with the supplier for over 20 years and has recently discovered that the supplier committed a breach in a warranty 3 years ago. Can Alan claim damages?

Options:

A.

yes- the breach has occurred and a contract is in place

B.

yes- Alan can claim damages and rescind the contract

C.

no- Alan could only claim if the breach was of a condition, not a warranty

D.

no- Alan cannot claim because the breach was so long ago

Question 4

Which of the following will you put into box 5?

Options:

A.

Condition

B.

Warranty

C.

Innominate Term

Question 5

A failure to perform a provision of a contract which does not affect the end performance of the contract is known as what?

Options:

A.

small breach

B.

minor breach

C.

major breach

D.

warranty breach

Question 6

Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required. What action can Verity Fashion take?

Options:

A.

sue for damages as the flip flops have already been made and this incurred costs

B.

nothing- there is no written contract in place

C.

subcontract the manufacturing of the flipflops to a third party

D.

claim on insurance

Question 7

A large financial organisation ensures that they have contracts with all of their suppliers. In which instance would indemnity not necessarily form part of the contract?

Options:

A.

A Deed of Appointment of a Consultant

B.

In assignment of intellectual property rights

C.

A software licence agreement

D.

A confidentiality agreement

Question 8

Which of the following will you put into box 3?

Options:

A.

Payment Term

B.

Time is of the Essence

C.

Subcontracting

D.

Specification

Question 9

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?

Options:

A.

yes- litigation is the most appropriate for his requirements

B.

no- Perry should try mediation

C.

no- Perry should try Adjudication

D.

no - Perry should try Conciliation

Question 10

A breach which is so severe that it goes to the root of the contract is known as what?

Options:

A.

fundamental breach

B.

condition breach

C.

major breach

D.

essence breach

Question 11

Which of these statements about mediation is true? Select TWO

Options:

A.

mediation is flexible

B.

mediation produces legal precedents

C.

mediation can be used as a stalling tactic

D.

mediation is expensive

E.

mediation involves a third party who makes a judgement on the issue

Question 12

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

Options:

A.

condition

B.

warranty

C.

consideration

D.

innominate

Question 13

Which of the following will you put into box 1?

Options:

A.

compete

B.

avoid

C.

compromise

D.

collaborate

Question 14

Which of the following would not be considered a contract? Select TWO

Options:

A.

A written agreement between two robbers to rob a bank which states that the money gained would be split evenly between the two.

B.

a domestic agreement between two parents about who will pick the kids up from school

C.

a phone call between a supplier and buyer in which the buyer agrees to purchase 100 teddy bears from the supplier for £100.

D.

a written document in which Paul agrees to clean Freda's house for £10

E.

an email chain between a buyer and supplier which includes a PO and Invoice

Question 15

Which of the following will you put into box 8?

Options:

A.

Mediation

B.

Arbitration

C.

Litigation

D.

Negotiation

Question 16

Which of the following is not a form of ADR (Alternative Dispute Resolution)?

Options:

A.

mediation

B.

negotiation

C.

arbitration

D.

conciliation

Question 17

Which of the following will you put into box 1?

Options:

A.

compete

B.

avoid

C.

compromise

D.

collaborate

Question 18

Logan Gin Distillery is creating a contract for one of its new suppliers. It is a complicated item that they are ordering and if things go wrong, it would have an extremely negative impact on production, and therefore on revenue. However it is impossible to say what the cost of this would be if things were to go wrong. What type of clause should be included in the contract?

Options:

A.

liquidated damages

B.

unliquidated damages

C.

penalty clause

D.

service credit

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Total 120 questions