QUESTION: 37

A construction company often subcontracts approximately 50% of the project works because of unpredictable customer's demand. Although larger corporate customers require quick response to RFQ, the time lapse between tender bid submission and contract commencement is usually long.
Which of the following arrangement would benefit both the contractor and customer?

Collateral contract
Bilateral contract
Indemnity agreement
Framework agreement

Answer(s): D

Explanation:

According to the scenario, customers' demand changes regularly but the construction project commencement often delays. If the contractor and the customer mutually sign a legally binding contract too soon long before the commencement, the contractor may suffer poor cash flow (it must buy the materials first but has to wait for long time to be paid). A framework agreement may help both parties.
A framework agreement is a formal agreement between two organisations that is intended to become legally binding in the event that a contract is created. A framework agreement could benefit the both parties in the following ways:
- At the time of signing, the framework agreement has not yet become a legally binding contract. The contractor and client only agree on the principles of future contracts (such as whether the work can be subcontracted or how payment will be proceeded). A well structured framework agreement will allow both parties to apply changes before contract commencement, especially regarding price and quality.
- The framework agreement assures a certainty between the contractor and client.
- The administrative works is reduced under a framework agreement.

Reference:

- CIPS study guide page 60-62
- Framework Agreements: Practice and Pitfalls LO 1, AC 1.3

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QUESTION: 38

Which of the following documents are likely to have legal standing? Select TWO that apply:

Quotation
Request for information
Tender
Requisition
Estimate

Answer(s): A,C

Explanation:

A quotation and a tender are both firm offers which have legal standing to the offeror. Tenders are more detailed than quotations and will include quality aspects as well as prices. LO 1, AC 1.1 & AC 1.2

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QUESTION: 39

What does quantum meruit mean?

As much as is earned
A non-graduations promise
As much as is paid
An implied promise

Answer(s): A

Explanation:

Quantum meruit means "the amount he deserves" or "as much as he has earned". In most cases it denotes a claim for a reasonable sum in respect of services or goods supplied to the defendant. An action in quantum meruit is available to recover money for services or goods supplied to a defendant in circumstances where the claimant is not recompensed by performing his obligations or supplying the goods. The claimant must usually show that the defendant expressly or impliedly requested or freely accepted the services or goods in question. Depending on the facts, the claimant might find it difficult to prove how much the claimant is entitled to receive under the principle of quantum meruit.
A claim for quantum meruit cannot arise if the parties have a contract to pay an agreed sum. In such circumstances, the parties' relationship is governed by the law of contract. However, a claim for quantum meruit may arise where the parties:
- Have not agreed a contract, or there is a so-called quasi-contract. For example, the parties may have agreed some of the contractual terms, but may have failed to reach an agreement on an essential term, such as price.
- Have not fixed a price for the services or goods supplied.
- Have an agreement to pay a reasonable sum for the services or goods supplied.
- Have agreed a scope of work under the original contract and the work carried out falls outside that scope.

Reference:

Quantum meruit LO 3, AC 3.1

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QUESTION: 40

Which of the following will be included in a conformance specification?
1. Brand names
2. Description of the operating environments
3. Chemical formulae
4. Required safety level

1 and 2 only
1 and 3 only
1 and 4 only
2 and 3 only

Answer(s): D

Explanation:

According to CIPS, there are two main types of specification:
- Conformance specification is more output driven as it outlines the product details exactly which may include the material, dimensions, tolerances, source, ingredients, packaging, storage of the part or material.
- Performance specification is more output driven in terms of what the part or material must achieve.
Among the four options, only 2. 'Description of the operating environments' and 3. 'Chemical formulae' are possible components of a conformance specification. Brand names can be a part of a performance specification, according to a document published by CIPS and NIGP.

Reference:

- CIPS study guide page 8-10
- Knowledge Byte - Specification Development
- Principles and Practices of Public Procurement: Specifications LO 1, AC 1.1

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