Commercial Contracting L4M3 Exam Questions
Express terms in a contract are stated in which of the following? Select TWO that apply
Correct Answer: A, D
Express terms are the terms of the agreement which are expressly agreed between the parties. Ideally, they will be written down in a contract between the parties but where the contract is agreed verbally, they will be the terms discussed and agreed between the parties.
Implied terms are terms implied into the contract by the courts. They are not expressly set out in the contract but are taken to be as effective as if they were and as if they had been included from day one of the contract. The express terms and any implied terms together create the legally binding obligations on the parties.
Setting key performance indicators (KPIs) for supplier performance should ensure ...
Correct Answer: B
KPIs track and control supplier performance, helping to identify and mitigate supply risks such as late delivery or poor quality.
They are a proactive management tool, not a price or sourcing mechanism.
Which of the following should be applied when measuring frequency of on-time deliveries during a contract period?
Correct Answer: B
Number of on-time deliveries can be quantified, then numerical measures can be applied.
Frequency of on-time deliveries is measured as on-time deliveries as a percentage of total no. of deliveries for period.
LO 2, AC 2.2
Procurement professionals must have an awareness of labour standards and environmental, social and governance issues when contracting with suppliers. Which TWO of the following are relevant for consideration?
Correct Answer: C, D
The question explicitly mentions labour standards and ESG (environmental, social, governance).
Modern Slavery (C): relates directly to labour and human rights (forced labour, trafficking, child labour).
Sustainability (D): covers environmental and social impacts, resource use, and long-term responsibility, key under ESG.
Indemnity and warranty are general legal/contractual concepts, and ISO9000 is a quality management standard, not specifically focused on labour/ESG.
Which of the following is always automatically considered as a contract?
Correct Answer: A
- A call off or a term contract is one which exists for a fixed period of time, rather than for a specific purpose
- A formal framework agreement does have some legal standing but it is not a contract, primarily because there is no consideration involved, but it is an overarching (or umbrella) agreementunder which contracts can be created (this holds true in English law but may not be right in other jurisdiction)
- A framework arrangement is a rather loose set-up, without any legal standing. It usually occurs when an organisation has decided for itself to limit the number of suppliers it is willing to work with and, through a purely internal process, sets up an approved list of such suppliers.
- A performance management framework including KPIs and targets, the assessment scheme and incentives, disincentives, bonuses and penalties. It is a schedule to a contract and only legally binding if it is referred from contract clauses.