CIPS L4M3 Chapter 3 (3.1)

Question 1

What are Express terms?

Answer 1

• Contractual terms which are specifically stated in contract
• Anything set out in a schedule to a contract

Question 2

What are Implied terms?

Answer 2

• Contractual terms that exist but are not written within the contractual documentation, i.e. the law of the land

Question 3

What will and an express term in a contract override?

Answer 3

• an implied term, unless the implied term is created by statute and the law states that it cannot be overridden

Question 4

Why should express terms be clear and what should they do in the contract?

Answer 4

• Set out the obligations of the purchaser
• Set out the obligations of the supplier
• Set out the rights of the purchaser if the supplier defaults
• Set out the rights of the supplier if the purchaser defaults
• State how the parties will deal with circumstances beyond the control of either party
• Where possible, either confirm or override any potentially implied terms

Question 5

What are Schedules?

Answer 5

• Appendices to the contract which provide more detail - often technical detail - on the requirements

Question 6

What is a contract clause?

Answer 6

• precise wording in the main document, which will have its own reference number

Question 7

What is a contract term?

Answer 7

• the totality of that part of the agreement and so includes the clause wording and any schedule which it refers

Question 8

What are Standard terms and conditions?

Answer 8

• They are basic terms and conditions of business governing transactions that do not have a definitive contract, usually designed to be included in form documents such as orders

Question 9

When are Standard terms used?

Answer 9

• repetitive transactions, particularly those that are of low value and low risk

Question 10

What are the advantages of using standard terms and conditions?

Answer 10

• Time saved in negotiating individually with suppliers
• Reduced admin costs
• Consistency of approach

Question 11

What are the disadvantages of standard terms and conditions?

Answer 11

• Risk that they do not become effectively incorporated into the contract - legal uncertainty and potential ‘battle of the forms’
• Do not allow for contract-specific risks
• Can become out of date
• Can create conflicts if attached to purchase orders that are also used as call-off orders under term contracts

Question 12

What is an Ineffective contract term?

Answer 12

• A term in a contract which cannot be legally enforced

Question 13

What are some examples that an ineffective clause may include?

Answer 13

• Exclusion of liability for negligence
• Unusual and unexpected conditions that would not normally apply and to which the other party’s attention was not specifically drawn
• Exclusion of liability for death of an individual
• Lack of warranty of fitness for purpose of the goods

Question 14

What are the key areas that must be covered in standard terms?

Answer 14

• Definitions
• Express term to override other standard terms (to avoid battle of the forms)
• Express term to state that in specific framework or term contracts signed by the parties, the express terms take precedence over standard terms
• Formation of the contract
• Order of precedence
• Price
• Invoicing and payment
• Specification
• Obligation to comply with the law
• Delivery and risk
• Warranties and liability
• Intellectual property and similar rights
• Termination
• Confidentiality and use of data
• Ethics and CSR
• Law and Jurisdiction

Question 15

What is the meaning of Precedent?

Answer 15

• A court judgement which is binding on future legal decisions

Question 16

What is a Legalese?

Answer 16

• A complex vocabulary of the legal profession

Question 17

What does Legal certainty mean?

Answer 17

• Knowing what the law says, what it means, and therefore how the courts will decide in the event of a dispute

Question 18

Why should simplifying legal contractual language not be done without seeking legal advice?

Answer 18

• because simplifying the language might remove some of the protection intended to be afforded by the wording

Question 19

List the examples of model form contracts

Answer 19

• NEC: New Engineering Contract
• JCT: Joint Contracts Tribunal
• AS: Australian Standards contracts
• FIDIC: International Federation of Consulting Engineers
• IMechE/IET: Institution of Mechanical Engineers/Institution of Engineering and Technology
• CIPS: Chartered Institute of Procurement and Supply
• ITC: International Trade Centre

Question 20

What are Model forms of contract and what do they contain?

Answer 20

• A model form of contract is a template.
• Model forms contract contain core clauses that are standard, but they are templates designed to be used with supporting documentation that is project-specific

Question 21

What are the key principles that apply across all the model forms?

Answer 21

• Contract-specific details: parties to the contract, contract subject matter, dates etc.
• Standard common clauses
• Schedules to cover pricing, specification, and any other contract-specific details

Question 22

When might improvements to model form contracts come about?

Answer 22

• Changes in national or international law
• Several legal disputes have highlighted an ambiguity or weakness in the contract
• Technological change in the sector creates new problems, risks or opportunities that need to be catered for within the contract

Question 23

What are the advantages of using model form contracts?

Answer 23

• Saves time and resource drafting bespoke contracts
• Both suppliers and purchasers familiar and comfortable with main terms
• Specific to sector or purchase type
• A measure of legal certainty on court’s response to disputes

Question 24

What are the disadvantages of using model form contracts?

Answer 24

• Poorly trained staff may use templates incorrectly or choose inappropriate model
• Amendments to published templates can create ambiguity
• May become out of date if not reviewed regularly
• May be biased depending on ownership of the mode