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CIPS Managing Contractual Risk Sample Questions (Q42-Q47):
NEW QUESTION # 42
Which of these statements about mediation is true? Select TWO
- A. mediation can be used as a stalling tactic
- B. mediation is expensive
- C. mediation is flexible
- D. mediation involves a third party who makes a judgement on the issue
- E. mediation produces legal precedents
The correct answers are 1 and 3. The other options are false; Mediation does not produce legal precedents- only litigation can do this. Mediation is a cheap dispute resolution option (much cheaper than arbitration or litigation) and the third party has no authority on the matter- they are there as a facilitator of dialogue, not to make a judgement. For more information on mediation see p.74
NEW QUESTION # 43
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?
- A. penalty clause
- B. service credit
- C. unliquidated damages
- D. liquidated damages
Unliquidated damages would be the best to include as there is no way of identifying a figure for liquidated damages. This would be the safest thing for the buyer to do. P.108 – section on Unliqui-dated Damages.
NEW QUESTION # 44
A warranty is a minor term of a contract. Is this TRUE?
- A. yes- it does not affect the prime benefit
- B. no- a warranty is a fundamental term in a contract
- C. no- a warranty is a type of innominate term
- D. yes- it affects the prime benefit of the contract
The correct answer is 1. The statement is True so the answer needs to start with ‘yes’. Therefore options 3 and 4 should be discounted. Option 2 is incorrect a warranty does NOT affect the prime benefit of the contract. See p. 126 for more details on Contractual Warranties and Conditions
NEW QUESTION # 45
Which of the following would not be considered acceptance of a contract term?
- A. silence
- B. a handshake
- C. an invoice
- D. accepting a delivery of a product into the factory
Silence is not acceptance. Acceptance can be in writing, verbal or implied by conduct. The three other options are ways in which a contract could be accepted by conduct. See p.8 of the study guide
NEW QUESTION # 46
Which of the following conflict resolution styles may involve a private caucus and a joint ses-sion?
- A. litigation
- B. negotiation
- C. adjudication
- D. mediation
This is Mediation. The private caucus is when each of the parties meets in private with the media-tor, this is usually after a joint session between the three parties. See p.71 for more information on mediation
NEW QUESTION # 47
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