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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q113-Q118):

NEW QUESTION # 113
Fresh Delight, a natural fruit juice company, sources fruit from Citrus Co. under a contract with a "time of the essence" and "retention of title" clause. Citrus Co. delivers fruit every Monday, but Fresh Delight has failed to pay for the last two deliveries. Claiming ownership under the retention of title clause, Citrus Co. attempts to reclaim the most recent delivery. Does Citrus Co. have a valid legal claim to retrieve the goods despite having delivered them?

A. No - if the delivery was made on time, it belongs to Fresh Delight
B. Yes - the product still belongs to Citrus Co
C. Yes - the product can be reclaimed under any circumstances
D. No - if Fresh Delight signed for the delivery, Citrus Co. has no right to reclaim it

Answer: B

Explanation:
Choice A- The retention of title clause in the contract means Citrus Co. retains ownership of the goods until Fresh Delight has fully paid for them. Even though the goods were delivered, the failure to pay gives Citrus Co. the right to reclaim them. Ownership (title) does not pass to Fresh Delight until payment is made. Correct answer.
Incorrect answer:
Choice B- While the retention of title clause allows Citrus Co. to reclaim the goods in this case, this right is not absolute. The clause must align with relevant legal frameworks, such as insolvency laws, which may limit Citrus Co.'s ability to reclaim goods in certain situations. Thus, goods cannot always be reclaimed "under any circumstances." Choice C- Signing for delivery does not override a retention of title clause. Even if Fresh Delight accepted and signed for the delivery, the ownership of the goods remains with Citrus Co. until payment is received.
Choice D- Timely delivery has no bearing on the ownership of the goods when a retention of title clause is in place. Ownership is tied to the payment, not the delivery schedule. Hence, Citrus Co. can still reclaim the goods if payment hasn't been made.
Reference:
LO-2.2; Page 190; Monitoring Contract Performance

NEW QUESTION # 114
What is the term for a clause in a contract that, if breached, allows the injured party to claim damages but does not result in the termination of the contract?

A. Warranty
B. Condition
C. Representation
D. Innominate term

Answer: A

Explanation:
Choice C- A warranty in a contract is a term that, if breached, allows the injured party to claim damages but does not give them the right to terminate the entire contract. Therefore, this is the answer.
Incorrect answer:
Choice A- A representation is a statement made by one party to another, often during pre-contractual negotiations, to induce them to enter into a contract. Representations are not terms of the contract, so their breach does not directly impact the contract itself in the same way as a condition, warranty, or innominate term. Since the question specifies a contractual clause, representation cannot be the correct answer.
Choice B- A condition is a fundamental term of the contract. Breaching a condition gives the injured party the right to: Terminate the contract, and Claim damages. The question explicitly states that the clause should not allow for termination of the contract. Therefore, a condition does not fit the criteria.
Choice D- An innominate term does not have a predefined classification as a condition or warranty. Its treatment depends on the severity of the breach: If the breach is serious, it could lead to termination (similar to a condition) or if the breach is minor, it only results in damages (similar to a warranty). Since the question specifies a clause that does not allow for termination regardless of the breach's impact, this term is too flexible to be the correct answer.
Reference:
LO-2.2; Page 190-191; Monitoring Contract Performance

NEW QUESTION # 115
Ruben is a new Procurement Manager at XYZ Company. He has been charged with buying a new piece of machinery for a factory. Having looked at several options, and considered sustainability, he has opted to buy the more expensive piece of machinery.
In terms of sustainability, why might he have made this choice?

A. The higher priced item is from a more reputable company
B. The higher priced item will be of better quality
C. In terms of life-cycle costing the more expensive item may be cheaper in the long term
D. The more expensive piece of equipment will be more environmentally friendly

Answer: C

Explanation:
This question is testing if you know about Whole Life Cycle Costing. You'll have come across this already at level 4 (module 7). It's a big part of sustainability. See p.14 for a quick recap on this. In terms of this question, even if you don't remember life-cycle costing, options 1 2 and 4 can't be right- we don't have information in the question that tells us that the higher priced item is better quality, from a reputable company or environmentally friendly- we just don't know based on the information we've been given so these answers can't be right.

NEW QUESTION # 116
Which tier of a supply chain would the original equipment manufacturer have the closest relationship with?

A. Tier 3
B. No tier
C. Tier 1
D. Tier 2

Answer: C

Explanation:

As shown in the figure, Tier 1 suppliers directly provide systems or services to the OEM. According to the study guide, the correct answer is Choice B. Reference: LO-2.1; Page 146; Mapping supply chains to achieve supply chain transparency

NEW QUESTION # 117
A discrimination claim has been filed against ASDA Stores Ltd, a leading UK retailer. The claimant alleges discrimination based on skin color and religion, violating the Equality Act 2010. If the claim is successful, what is the maximum compensation award?

A. £20,000 per worker
B. No limit
C. £10,000 only
D. 90 days' pay per employee

Answer: B

Explanation:
Choice D- For a breach of Equality Act 2010, there is no limit on the award of compensation in a discrimination claim. Thus is the correct answer.
Incorrect answer:
Choice A - 90 days' pay per employee is an award relating to dismissal on grounds of redundancy not discrimination.
Choice B - The average award for unfair dismissal is around £10,000 only not discrimination.
Choice C -The maximum penalty that employers had to pay for non-compliance with national living wage law is £20,000 per worker, which is not concerned with discrimination.
Reference:
LO-1.3; Page 40; Role of EDI in securing ethical and sustainable procurement and supply arrangements

NEW QUESTION # 118
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