Exam Questions

Question 1

1. Katie has set a measure which means a supplier has to delivery 99% of all deliveries within 2 days of the purchase order due dates. This measure is clearly
   a. measurable and achievable
   b. relevant and achievable
   c. specific and timebound
   d. realistic and timebound

Answer 1

c. specific and timebound

Question 2

2. Which would fall into the operational performance section of a service level agreement?
   a. Liquidated damages clauses for late completion of works
   b. a first response action and timescale for resolution
   c. The frequency of measurement
   d. The key performance indicators

Answer 2

b. a first response action and timescale for resolution

Question 3

3. Which statement is correct about service level agreements
   a. The recipient of a service must be the purchaser
   b. The provider of a service could be a person, organisation, supplier or contractor
   c. Quality is a term which relates only to quality of the goods or timeliness, location and completeness of the service
   d. It should not be contractually binding

Answer 3

b. The provider of a service could be a person, organisation, supplier or contractor

Question 4

4. Kirsty has set a KPI in which the supplier must score a minimum of good overall in a customer satisfaction survey. What type of measure is this?
   a. Binary
   b. Numerical
   c. Qualitative
   d. Objective

Answer 4

c. Qualitative

Question 5

5. Which would be an advantage of standardisation?
   a. Increased likelihood of lower pricing
   b. improved flexibility/agility
   c. A reduction in the number of suppliers able to tender
   d. A reduction in lead-time of 50%

Answer 5

a. Increased likelihood of lower pricing

Question 6

6. Why is the statement “time is of the essence” important to include in a contract
   a. It allows liquidated damages to be claimed in the event of late delivery
   b. It indicates that a contract will terminate at the end of the contractual period
   c. It ensures that a contract can be terminated in the event of late delivery
   d. It indicates that the contract will renew at the end of contractual period unless notice is given

Answer 6

c. It ensures that a contract can be terminated in the event of late delivery

Question 7

7. Which of the following is not likely to be included within standard terms and conditions?
   a. obligation to comply with the law
   b. order of precedence
   c. requirement for good to be fit for purpose
   d. liquidated damages

Answer 7

d. liquidated damages

Question 8

8. What does the term Caveat Emptor mean?

a. the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.
b. the seller is responsible for proving that goods are fit for purpose
c. title and ownership of goods passes only on full payment for the goods
d. that the contract is being entered into “in good faith”

Answer 8

a. the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Question 9

9. What does the term liability mean?
   a. being legally responsible for something
   b. a security or protection against loss, usually by way of financial recompense
   c. being responsible for something without the need for any proof
   d. the party accepts responsibility to pay damages in the event of a breach of contract

Answer 9

a. being legally responsible for something

Question 10

10. Organisations try to limit the scope of liability, by excluding which types of losses
    a. Indirect Losses
    b. Direct Losses
    c. Indemnification Losses
    d. Variable Losses

Answer 10

a. Indirect Losses

Question 11

11. A lawyer provides advice to clients. Which insurance should the lawyer have?
    a. Employers Liability insurance
    b. Product Liability insurance
    c. Professional indemnity insurance
    d. Advisory insurance

Answer 11

c. Professional indemnity insurance

Question 12

12 “The contractor shall include in that Subcontract provisions having the same effect as clause 1 to 3 of this agreement”. The purpose of this statement is to

a. agreed subcontracting is permitted
b. ensure the main contractor retains liability
c. ensure the buyers terms influence the subcontractor
d. gain buyer approval on the use of any subcontractor

Answer 12

c. ensure the buyers terms influence the subcontractor

Question 13

13. An informal framework agreement….
    a. has no legal standing
    b. ensures the buyers Ts & Cs will apply
    c. guarantees that suppliers will be awarded work
    d. locks the purchaser into agreed pricing

Answer 13

a. has no legal standing

Question 14

14. James negotiates a fixed price for a refurbishment project. Identify two disadvantages of this approach
15. price increases will be linked to indexation
16. decreases in material costs will not be passed onto the buying organisation
17. a risk that a supplier may over-inflate the fixed price to mitigate against rises they cannot pass on
18. if there is a minor change to the specification the price will not change
    a. 1 and 2
    b. 1 and 4
    c. 2 and 3
    d. 2 and 4

Answer 14

c. 2 and 3
2. decreases in material costs will not be passed onto the buying organisation
3. a risk that a supplier may over-inflate the fixed price to mitigate against rises they cannot pass on

Question 15

15. Identify the indirect costs (select 2)
    a. raw materials
    b. production labour
    c. buildings insurance
    d. IT infrastructure costs

Answer 15

c. buildings insurance

d. IT infrastructure costs

Question 16

16. 1 box of paper = £20ea, 10 boxes of paper = £200(total)? This is an example of
    a. non-linear pricing
    b. economies of scale
    c. linear pricing
    d. target costing

Answer 16

c. linear pricing

Question 17

17. Termination of contract or damages is the remedy for
    a. Innocent misrepresentation
    b. Late delivery
    c. Fraudulent misrepresentation
    d. Negligent misconduct

Answer 17

a. Innocent misrepresentation

Question 18

18. Which latin phrase means “a reasonable sum of money must be paid for services received or work done when the amount due is not stipulated in a contract”?
    a. Bona Fide
    b. Consensus ad idem
    c. Quantum meruit
    d. prima facie

Answer 18

c. Quantum meruit

Question 19

19. Which statement is incorrect in relation the Sales of Goods Act.
    a. Goods must be as described and must match any sample you were shown in store, or any description in a brochure.
    b. Good must be supplied fit for purpose.
    c. Goods must be of satisfactory quality and any defect or issue should have been made clear to you when you bought the goods
    d. If goods are lost or damaged in transit then the carrier is responsible for providing a refund for the goods.

Answer 19

d. If goods are lost or damaged in transit then the carrier is responsible for providing a refund for the goods.

Question 20

20. Which approach to market dialogue is most likely to deliver supplier-specific information on product and specification development?
    a. Networking
    b. Meet the buyer events
    c. One to one meetings
    d. Group visits

Answer 20

c. One to one meetings

Question 21

1) Which of the following are the most appropriate pieces of information to include on a standard RFQ form?
a) The home address of the buyer
b) The quantity and description of the goods or services
c) A full list of the staff that work in the team
d) A reference number and date the reply is due

Answer 21

b) The quantity and description of the goods or services

Question 22

2) A performance specification has several features that makes it different from a conformance specification. Select two of these from the list below:
a) The specification describes to the supplier exactly what the buyer requires
b) The specification will need to relate to a brand name and model name
c) The key functionality attributes or capabilities to be achieved
d) The quality levels including relevant quality standards required
e) The compliance with a recognised standard (eg British standards)

Answer 22

c) The key functionality attributes or capabilities to be achieved
d) The quality levels including relevant quality standards required

Question 23

3) You are a senior buyer in a large manufacturing company. The engineering team is looking for a product that will assist them in a new innovative project. The technology is evolving and the product supplied is likely to be bespoke to the supplier. You are suggesting the use of a performance specification as part of the tender; what is the main reason for this?
a) The cost of the product is likely to be cheaper
b) This places the responsibility for success with the supplier
c) The tender process is likely to be faster
d) This will allow a comprehensive description of the product

Answer 23

b) This places the responsibility for success with the supplier

Question 24

4) When negotiating international contracts, how should the buyer ensure ethical compliance?
a) Verify that the supplier’s employees are all paid a living wage
b) Ensure the supplier operates an equal opportunity policy
c) Insist the supplier’s workforce enjoys union representation
d) Confirm the supplier’s standards align with the buyer’s

Answer 24

d) Confirm the supplier’s standards align with the buyer’s

Question 25

5) Which of the following are implied terms in a contract? Select three that apply
a) Passing of risk
b) Time of performance
c) Satisfactory quality
d) Fitness for purpose
e) Limitation of liability
f) Passing of property

Answer 25

c) Satisfactory quality
d) Fitness for purpose
f) Passing of property

Question 26

6) Cheryl put together a service contract for outsourced decontamination of a factory workshop. She spent a long time writing suitable KPIs for the contract. Which would be the best measure to include in a KPI for decontamination?
a) Asking for annual financial statements to be sent once published
b) Stating what colour the uniforms are for the operatives to wear
c) Listing what areas need to be cleansed in a specific timeframe
d) Naming all appropriate personnel on the contract

Answer 26

c) Listing what areas need to be cleansed in a specific timeframe

Question 27

7) Which of the below is more suited to a one-off purchase than a long-term contract?
a) The ordering of equipment for a special project
b) A requirement for the maintenance of buildings
c) The purchase of compatible IT infrastructure equipment
d) The purchase of internal and external audit services

Answer 27

a) The ordering of equipment for a special project

Question 28

8) An effective KPI could be
a) Standardised, meaningful, realistic, typical
b) Sustainable, realistic, measurable, analysed, timely
c) Specific, measurable, realistic, timely
d) Specific, meaningful, analysed, realistic, typical

Answer 28

c) Specific, measurable, realistic, timely

Question 29

9) You are a procurement manager for a successful electrical component re-seller and distributor. The company presently carries stock of over 50,000 different items, some of which will be variances of the same product, or similar products from different manufacturers. The managing director of the business is looking to increase the margin on products sold and has asked for your support. It is a competitive industry with a customer base that will be resistant to a price increase. Which of the following could support this request?
a) Improve the quality of products purchased
b) Increase the range of products sold
c) Standardise the products purchased
d) Reduce the range of products purchased

Answer 29

c) Standardise the products purchased

Question 30

10) Which type of contract is likely to be used with a transactional supplier?
a) One-off contract
b) Framework contract
c) Call off contract
d) Model form contract

Answer 30

a) One-off contract

Question 31

11) ZTX limited is developing a new product to increase its competitive advantage. They are looking for suppliers to use their expertise and innovation to assist with developing a new component. What is the appropriate specification to use?
a) Performance specification
b) Conformance specification
c) Output specification
d) Service-level specification

Answer 31

a) Performance specification

Question 32

12) Which of the following arrangements would contain the necessary consideration? (choose two)
a) Complimentary tiles because the style was discontinued
b) Bricklayer labour provided by a family member free of charge
c) A newly built house and payment for the house
d) Carpet fitted in exchange for lunch

Answer 32

c) A newly built house and payment for the house

d) Carpet fitted in exchange for lunch

Question 33

13) The costs in a cost reimbursable contract are described as…
a) Fixed costs
b) Variable costs
c) Actual costs
d) Indirect costs

Answer 33

c) Actual costs

Question 34

14) Setting KPIs for supplier performance should insure…
a) Reduced vendor base
b) Managed supply risks
c) Lowest price for products
d) Earliest delivery

Answer 34

b) Managed supply risks

Question 35

15) In order for a contract to exist and be legally binding, certain elements must be present. Select three:
a) There must be an agreement in the form of offer and acceptance
b) There has to be money transferred at the time of the contract
c) There must be an intention to create legal relations
d) All parties must have contractual capacity
e) The RFQ must be received at the correct time
f) There must be the opportunity to counter-offer

Answer 35

c) There must be an intention to create legal relations
d) All parties must have contractual capacity
a) There must be an agreement in the form of offer and acceptance

Question 36

16) Which of these statements is a correct definition of a contract?
a) A promise made by a supplier to supply goods of services
b) An agreement made by two or more people enforceable by law
c) An offer and acceptance has taken place
d) A promise made by a buyer to place an order

Answer 36

b) An agreement made by two or more people enforceable by law

Question 37

17) What is the best way to prevent a battle of the forms?
a) Return the order acknowledgement to the supplier
b) Send multiple copies of the PO to the supplier
c) Negotiate and sign a contract or framework with a supplier
d) Throw away any paperwork that you receive from the supplier

Answer 37

c) Negotiate and sign a contract or framework with a supplier

Question 38

18) What are two advantages to the supplier of KPIs?

Answer 38

The supplier can demonstrate performance improvement/maintenance
The supplier can be clear about expectations of their performance

Question 39

19) Which of the following are examples of express terms?
a) Time of performance, payment terms, passing of title
b) Force majeure, Sale of Goods Act terms, payment terms
c) Unfair Contract Terms Act terms, payment terms, passing of title
d) Time of performance, passing of title, terms based on trade custom

Answer 39

a) Time of performance, payment terms, passing of title

Question 40

20) In a standard or negotiated agreement, a pricing schedule will include details of a number of elements. Select two that apply:
a) Key elements that the calculated price doesn’t include
b) The supplier’s schedule of prices, fees and charges
c) The mechanism used to calculate the price
d) A model form of contract schedules that has been used
e) The remedies available should the contract fail

Answer 40

b) The supplier’s schedule of prices, fees and charges

c) The mechanism used to calculate the price

Question 41

21) Which of the following statements about KPIs is true?
a) They are only appropriate for service contracts
b) They should be communicated after the contract is signed
c) They focus suppliers on key elements of contract delivery
d) They guarantee that suppliers will display the right behaviours

Answer 41

c) They focus suppliers on key elements of contract delivery

Question 42

22) A PO has been raised for £5000. It allows the user department to order items of £50 value when they need them. This is an example of what type of order?

Answer 42

Blanket order

Question 43

23) A fixed pricing arrangement will be beneficial to use in which circumstances?
a) Where the accuracy and reliability of the project scope is known
b) Where the supplier is inexperienced
c) Where the estimates of all costs are known
d) Where the contractor will be able to obtain incentives for early completion

Answer 43

a) Where the accuracy and reliability of the project scope is known

Question 44

24) What would a written clause on a liability be best described as?
a) Model term
b) Standard term
c) Implied term
d) Express term

Answer 44

d) Express term

Question 45

25) What pricing arrangement would be used if the buyer is operating to an exact budget?
a) Cost plus pricing
b) Fixed pricing
c) Indexation pricing
d) Incentivised pricing

Answer 45

b) Fixed pricing

Question 46

26) The Unfair Contract Terms Act 1977, prevents exclusion of liability for…
a) Negligence and breach of statutory implied terms
b) Equal opportunities and negligence
c) Breach of statutory implied terms and equal opportunities
d) Breach of statutory implied terms and legal capacity

Answer 46

a) Negligence and breach of statutory implied terms

Question 47

27) An invitation to treat is the willingness to receive an order. Is this statement true or false?
a) True, because it is an acceptance of contract terms
b) True, because it is an acceptance of an offer
c) False, because it is preparedness to negotiate a contract
d) False, because it is a requirement to provide a price

Answer 47

c) False, because it is preparedness to negotiate a contract

Question 48

28) KPIs are used for
a) Measuring risks
b) Defining the level of service (This is an Service Level Agreement)
c) Measuring supplier achievements
d) Negotiating with a supplier

Answer 48

c) Measuring supplier achievements

Question 49

29) Which formalised system of contracts was created by the Institute of Civil Engineers to guide drafting of documents on engineering and construction projects?
a) JCT
b) FIDIC
c) NEC
d) IMechIEE

Answer 49

c) NEC

Question 50

30) Foodstuffs may arrive from an overseas supplier in a deteriorated state. Is this covered under the implied term of satisfactory quality?

Answer 50

Yes

Question 51

1. Health and safety, preliminaries, specification, core lists or exclusion lists are common types of (select one)
   a. schedules
   b. recitals
   c. articles
   d. KPIs

Answer 51

a. schedules

Question 52

2. Katherine is procuring a 100k industrial boiler which is a major Capex expenditure for the organisation. What type of contractual arrangement would be appropriate? (select one)

a. term contract
b. one off contract
c. standard terms and conditions
d. framework agreement

Answer 52

b. one off contract

Question 53

3. Implied Contract terms can be implied through
4. Custom and practise
5. Verbal agreements
6. Laws of Statute
7. Contract negotiations

a. 1 and 2
b. 1 and 3
c. 2 and 3
d. 2 and 4

Answer 53

b. 1 and 3
1. Custom and practise
3. Laws of Statute

Question 54

4. Pradeep purchased a pair of trainers because the advertisement stated that they were “the most comfortable shoes you will ever wear and they were like walking on air”. Six months after purchasing the shoes, Pradeep wears the shoes for a week on a hiking holiday and develops blisters. He takes the shoes back to the shop and argues that he wants his money back. Is Pradeep likely to be able to get is money back? (select one)

a. Yes, because the advertisement was part of the offer and therefore this is misrepresentation
b. Yes, because there is an express term in contract that states that goods should be fit for purpose
c. No, because the advertisement was the provision of information only and therefore not misrepresentation
d. No, because this was likely to be advertising puff and not intended to be serious statement

Answer 54

d. No, because this was likely to be advertising puff and not intended to be serious statement

Question 55

5. For a contract to come into being there needs to be which 5 conditions (select one)
   a. offer, acceptance, capacity to contract, consideration & intention to create legal relations
   b. offer, counteroffer, consideration, capacity to contract and intention to create legal relations
   c. invitation to treat, offer, acceptance, consideration and capacity to contract
   d. offer, acceptance, adequate consideration, capacity to contract and intention to create legal relations

Answer 55

a. offer, acceptance, capacity to contract, consideration & intention to create legal relations

Question 56

6. What does the term Caveat Emptor mean? (select one)

a. the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.
b. the seller is responsible for proving that goods are fit for purpose
c. title and ownership of goods passes only on full payment of bills
d. that each party should offer something to the other.

Answer 56

a. the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made.

Question 57

7. Which of the following would be conditions for misrepresentation (select one)
8. A statement must be made or implied by conduct
9. The statement must be put in writing
10. The statement must be true
11. The statement must have encouraged the party to enter into the contract

a. 1 and 2
b. 1 and 4
c. 2 and 4
d. 3 and 4

Answer 57

b. 1 and 4
1. A statement must be made or implied by conduct
4. The statement must have encouraged the party to enter into the contract

Question 58

8. The WTO rules …. (select one)

a. applies to all countries
b. applies to all international trade
c. ensures that trade is free from tariff and quotas
d. can apply to goods and services

Answer 58

d. can apply to goods and services

Question 59

9. An informal framework agreement…. (select one)

a. has no legal standing
b. ensures the suppliers standard Ts & Cs will apply
c. guarantees that suppliers will be awarded work
d. locks the purchaser into agreed pricing

Answer 59

a. has no legal standing

Question 60

10. Select three correct statements about hire/lease contracts

a. The Vienna Convention does not apply to hire contracts
b. Contract formation is the same as contracts for sale
c. Risks can be transferred to the buyer
d. The supplier is responsible for the maintenance of the equipment
e. Ownership is passed to the buyer
f. The law specifies that the buyer can purchase the equipment at the end of a lease

Answer 60

a. The Vienna Convention does not apply to hire contracts
b. Contract formation is the same as contracts for sale
c. Risks can be transferred to the buyer

Question 61

Q1/ Suggest three elements that should be within a management response section of a service level agreement

a. a list of the KPIs
b. first action response
c. when the requirements should be waived
d. escalation process
e. the point when a failure become a potential breach of contract
f. a list of definitions

Answer 61

b. first action response
d. escalation process
e. the point when a failure become a potential breach of contract

Question 62

Q2/ Where would not you expect to see KPIS (Select two options)

a. SLA
b. Standard T & Cs
c. Specification
d. Articles
e. Schedules

Answer 62

b. Standard T & Cs

d. Articles

Question 63

Q3/Which would be a good approach to contracting? (Select one option)

a. purchasing everything on standard ts & cs
b. using a bespoke contract for most procurements
c. including a specification and SLA as part of a set of contract documents
e. using a model form contracts for service procurements

Answer 63

c. including a specification and SLA as part of a set of contract documents

Question 64

Q4/ Compliance with the ILO is an example of (Select one option)

a. Ethical Practise
b. Environment Practise
c. Technical Standard
d. Quality standards

Answer 64

a. Ethical Practise

Question 65

Q5/ Which of the following enables bidders to present solutions that the buyer might not have considered when responding to an Invitation To Tender (ITT)? (Select one option)

a. Technical specification.
b. Input specification.
c. Performance specification.
d. Conformance specification.

Answer 65

c. Performance specification.

Question 66

Q6/ Dylan manages a call centre. He meets with the senior team to review performance. James, the customer serviced manager states that they measure performance because 99% of all calls are answered within 5 seconds. Dylan is concerned that this is not necessarily the best measure of effectiveness of the service. Which KPI would best measure effectiveness of the service? (Select one option)

a. % of calls that last less than 30 seconds
b. % of calls that lead to a first time resolution/fix
c. % of calls that are abandoned before they get answered
d. number of calls by each operator by period

Answer 66

b. % of calls that lead to a first time resolution/fix

Question 67

Q7. Linda has been asked to set the OTIF target to 99.7%. What could the unintended consequences of this decision be? (Select two options)

a. zero partial shipments
b. over-delivery of parts
c. increased inspection costs
d. increased storage requirements

Answer 67

a. zero partial shipments

c. increased inspection costs

Question 68

Q8. A KPI is set which measures current lead-time in one quarter with the lead-time in the previous quarter. The target is to achieve a reduction of five days. The Stores Manager states that this a good way to measure on time delivery, but a consequence is that costs will increase. Is this correct? (Select one option)

a. yes, measuring on time delivery is critical to all organisations however it can lead to increased inspection and inventory costs
b. yes, measuring on time delivery is important to all organisations however it can lead to the price of the product increasing
c. no, it is a measure of average lead time which can lead to increased storage costs if items are delivered earlier
d. no, it is a measure of average lead time and emergency order fulfilment which has no adverse consequences.

Answer 68

c. no, it is a measure of average lead time which can lead to increased storage costs if items are delivered earlier

Question 69

Q9. KG Office Chairs is keen to expand its operations. Currently it supplies customers the UK and Ireland. This year it intends to develop two new chairs which it will introduce into Eastern Europe. The core objectives are to be first to market with innovative products and it prides itself on an exceptional record of providing quality products. It is contracting with a new supplier which will provide the steel frames and components for the new chairs. Identify the KPIs which link with the organisations core objectives. (Select two options)

a. 99.9% of items delivered to meet quality standards/comply to specification
b. 99.9% of customer rejects replaced within 3 weeks
c. a minimum of 5 innovations suggested per annum
d. 2% rework requests per annum

Answer 69

a. 99.9% of items delivered to meet quality standards/comply to specification
c. a minimum of 5 innovations suggested per annum

Question 70

Q10. Which of the following KPIs is more likely to be included in a framework agreement than a contract for a one-off purchase? (Select one option)

a. maximum rate of rejects
b. compliance with a quality standard
c. compliance with ethical standards
d. % of OTIF deliveries.

Answer 70

d. % of OTIF deliveries.