L4M3 Exam Dumps - CIPS Level 4 Diploma in Procurement and Supply Questions and Answers

Variable pricing is suitable to situations when the cost of certain elements of the product fluctuate unpredictably. For road building, asphalt fluctuates regularly. Furthermore, 5 years are long period, then variable pricing is the most appropriate method to achieve value for money and control budget.

A contract for window cleaning during the next three months is a short-term service contract, fixed price is the most suitable method.

A contract for the supply of lubricating oil for immediate delivery is an one-off contract, only fixed price is applicable.

A contract for the supply of 100 printing machines to be delivered next month is also an one-off contract.

Request for quotations is often used when the only variable is price and the purchase value is under a financial threshold. This process is less formal than ITT. RFQ should be used in the following circumstances:

- Low-value, low-risk purchases

- When the specifications are sufficiently defined or the product/service is standardised

- Where the suppliers are pre-qualified

- Where there is a framework agreement which specifies the contract terms and conditions.

An SLA outlines the expected performance levels and includes KPIs and consequences for non-performance (often in the form of penalties or service credits). Force majeure and jurisdiction clauses are typically part of the main contract terms, not the SLA, which is more operational in nature.

A service-level agreement (SLA) defines the level of service you expect from a vendor, laying out the metrics by which service is measured, as well as remedies or penalties should agreed-on service levels not be achieved.

According to CIPS L4M3 study guide, SLA should cover the following:

- KPIs

- How the measurements convert into scores

- Any other service level standards

- Minimum acceptable standards or scores in each case

- Range of scores both above and below the minimum acceptable

- Any mitigating factors which might apply in the event of poor performance

- Any time period permitted in which to remedy a situation of poor performance

- Remedies available

- Dispute settlement

- How to deal with inconsistencies or conflicts between KPIs and any other documents.

In IT service (such as in the scenario), the SLA often covers:

- Uptime

- Call metrics

- Customer satisfaction

- Turn around time

- Quality

- Mean time to recovery

- Mean time between failure

- Backlog

- Business results

You can read the details of above indicators here.

A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. Some characteristics of Leases are:

- The right to use the lessor’s asset is granted in exchange for a fee called the lease payment.

- The lease payments are usually paid in installments.

- Leases may be long- or short-term.

- At its inception a lease agreement constitutes a mutually unperformed contract

Though the ownership of the asset is not transferred to the lessee, some responsibilities and risks do. The lessor and lessee may negotiate on who is responsible on maintenance, insurance, etc.

Performance management framework often consists of KPIs, targets and consequences that arise from achieved scores. To ensure that the framework has binding effect on contracting parties, it should be developed, appended to the main contract document and agreed by both parties. So the answer should be "Yes, because the framework should have legal standing as a part of contract".

An untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. An action for misrepresentation can be brought in respect of a misrepresentation of fact or law.

There are three types of misrepresentation:

- Fraudulent misrepresentation: where a false representation has been made knowingly, or without belief in its truth, or recklessly as to its truth.

- Negligent misrepresentation: a representation made carelessly and in breach of duty owed by Party A to Party B to take reasonable care that the representation is accurate. If no "special relationship" exists, there may be a misrepresentation under section 2(1) of the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds for believing its truth.

- Innocent misrepresentation: a representation that is neither fraudulent nor negligent.

The remedies for misrepresentation are rescission and/or damages. For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. For innocent misrepresentation, the court has a discretion to award damages in lieu of rescission; the courtcannot award both (see section 2(2) of the Misrepresentation Act 1967). For more information, see Practice note, Misrepresentation.

The “battle of the forms” arises when each party seeks to have its own terms and conditions govern the contract.

Under common law, the terms last sent and accepted (expressly or by conduct) usually apply.

The battle of the forms occurs when:

Both buyer and supplier exchange documents (RFQ, PO, acknowledgements) containing their own standard terms and conditions,

Each party is trying to ensure their own terms govern the contract.

It is literally a battle to secure their own terms and conditions (A).

The five essential elements of a valid contract are: offer, acceptance, consideration (something of value exchanged), capacity (legal ability to contract), and correct form (in writing if required). These ensure that contracts are legally enforceable and binding.