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NEW QUESTION 20

Which of the following is always an advantage of using fixed price arrangement in a contract for buying organisation?

  • A. Buyer can allocate budget with certainty
  • B. Buyer can harness falling market price
  • C. Suitable for contracts that last 5 years or more
  • D. Supplier always receives a fixed margin

Answer: A

Explanation:

Advantages of using fixed pricing arrangement are as below:

- Budget/income certainty - prices are fixed up front and should not change

- The impact of changes to the supplier's cost base is not fed through to the purchaser. If costs diminish, the supplier will benefit from this, and if costs rise, the purchaser will benefit Reference:

LO 3, AC 3.3

NEW QUESTION 21

Which of the following will always give rise to a claim of misrepresentation?

1. Silence

2. False thought

3. Statement of fact

4. Representation by conduct

  • A. 2 and 4 only
  • B. 1 and 3 only
  • C. 1 and 2 only
  • D. 3 and 4 only

Answer: D

Explanation:

A misrepresentation is a false statement of fact or law which induces the representee to enter a contract. Where a statement made during the course of negotiations is classed as a representation rather than a term an action for misrepresentation may be available where the statement turns out to be untrue.

For a party to claim for misrepresentation, there must be a false statement of fact or law as oppose to opinion or estimate of future events. It does not matter whether the incorrect information is given by words or takes the form of misleading conduct.

Silence will not generally amount to a misrepresentation. However, it can become a misrepresentation in some exceptional circumstances.

In the L4M3 study guide, the author states that "A statement of law is not misrepresentation". This is untrue in both common law and civil law systems. In the UK, false statement of law will now amount to an actionable misrepresentation (see Pankhania v Hackney [2002] EWHC 2441).

Reference:

- Misrepresentation

- L4M3 study guide page 53-55

LO 1, AC 1.2

NEW QUESTION 22

You are to do the KPIs and targets for international supplier and the following was done

1. Delivery in an hour

2. Return orders in an hour

Is that a good thing or not?

  • A. Yes, because these targets will propel the suppliers to continuous improvement
  • B. No, the local suppliers are always the best choice
  • C. No, because the KPIs are not a realistic and justified
  • D. Yes, the higher the targets are, the better the outcomes will be

Answer: C

Explanation:

KPIs and the targets for supplier should be SMART:

- Specific: What exactly do you want to achieve?

- Measurable: How will you identify that you have achieved your goal?

- Achievable: Is your goal really attainable?

- Relevant: Is it relevant to you or, in other words, does it align with where you want to be?

- Time-bound (or timely): When will you deliver your goal, and what are the key milestones?

The two KPIs (Delivery in one hour, Return orders in one hour) are not realistic and achievable for international suppliers. Therefore, you should not put such high targets for supplier.

Reference:

- What Are SMART KPIs? (Spoiler: They Don't Really Exist!)

- CIPS study guide page 107-108

LO 2, AC 2.2

NEW QUESTION 23

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