QUESTION: 57

In a sale contract, a clause requires the seller to "defend, reimburse, and hold harmless" the buyer and its personnel from and against any and all damages arising in connection with some specific circumstances. This clause is an example of...?

Insurance
Liquidated damages
Indemnity
Force Majeure

Answer(s): C

Explanation:

An indemnity is a promise by one party to compensate another for the loss suffered as a consequence of a specific event, called the ''trigger event''. The trigger event can be anything defined by the parties, including:
- A breach of contract;
- A party's fault or negligence;
- A specific action.
An indemnity operates as a transfer of risks between the parties, and changes what they would otherwise be liable for or entitled to under a normal damage claim. Force Majeure Provisions: A force majeure event refers to the occurrence of an event which is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract.
Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. It is a provision that allows for the payment of a specified sum should one of the parties be in breach of contract. LO 3, AC 3.2

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QUESTION: 58

Which of the following encourages social and environmental criteria in public sector contracting in the UK?

Social Action, Responsibility and Heroism Act
The Public Services Act
Children and Social Work Act
Supply and Appropriation Act

Answer(s): B

Explanation:

Social and environmental criteria are increasingly encouraged in public sector contracting. In the UK, The Public Services (Social Value) Act 2012 encourages public organising to apply social and environmental criteria in contract.

Reference:

CIPS study guide page 98-99 LO 2, AC 2.1

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QUESTION: 59

A construction company is undertaking a housing development project. They need lots of bricks and other building materials, but the construction site doesn't have large area for storage of materials. Therefore, the company's suppliers must deliver the building materials with fixed quantity and at fixed time intervals.
What type of contract is used between the construction company and its suppliers?

Framework agreement
Spot transaction
One off contract
Call off contract

Answer(s): D

Explanation:

In the scenario, the contract between the company and its suppliers is continuous rather than one- off. So it cannot be one-off contract or spot purchase. The quantity and time is well known and fixed, this type of contract is known as call-off contract or blanket order.

Reference:

CIPS study guide page 63-64 LO 1, AC 1.3

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QUESTION: 60

Which of the following is the set of principles that enables courts to determine exactly what the written contract says and what that must mean, then the court will uphold that?

Order of precedence
Rules of interpretation
Unfair Contract Act 1977
Rules of contract formation

Answer(s): B

Explanation:

Courts may be called upon to interpret a statute due to disputes over the meaning of a word or phrase contained within a statute. These disputes may arise through a variety of reasons. It has long been held that words are an imperfect means of communication. Omissions may have occurred at the drafting stage, word or phraseology ambiguity, etymological change through time, oversight on specific points, or a failure to adapt legislation to new developments. This may result in the judiciary providing a role in statutory interpretation. Statutory interpretation in its broadest sense is the process of determining the true meaning of a written document. In UK, the Interpretation Act 1978 provides limited scope to assist judges with statutory interpretation in that it only provides standard definitions to common provisions such as a rebuttable presumption that terminology in the masculine gender also include the feminine, and that the singular includes plural. An order of precedence clause sets out the order in which the contract documents take precedence in the event of an inconsistency.
The Unfair Contract Terms Act 1977 (c 50) is an Act of Parliament of the United Kingdom which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The terms extend to both actual contract terms and notices that are seen to constitute a contractual obligation.

Reference:

- Rules of Statutory Interpretation
- CIPS study guide page 43-46 LO 1, AC 1.2

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QUESTION: 57

Explanation:

QUESTION: 58

Explanation:

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QUESTION: 59

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QUESTION: 60

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