QUESTION: 81

When a supplier signs an insurance policy with an insurance company, which of the following is transferred to insurance company?

Right
Risk
Legal responsibility
Contractual obligation

Answer(s): B

Explanation:

An insurance policy transfers a specific set of risks such as the fire and flood risk for a particular asset. The legal liability does not transfer to the insurance company (known as insurer).

Reference:

CIPS study guide page 150 LO 3, AC 3.2

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QUESTION: 82

Which of the following is likely to reduce risks of different rules regarding when offers and acceptance become effective between legal systems?

Withdrawal protocol
Letter of intent
Time lapse
Deemed receipt protocol

Answer(s): D

Explanation:

Regarding rule of offer and acceptance, there are some differences among legal system around the world. For example, mailbox rule is generally applied in common law countries such as UK, US, Australia,.. while it is ignored in civil law countries. To clarify on rule of offer and acceptance in international trade, offerors may use expressed terms in their offers. These terms known as deemed receipt protocol.

Reference:

CIPS study guide page 35 LO 1, AC 1.2

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QUESTION: 83

Which of the following is the best definition of "ultra vires"?

Beyond powers
In good faith
From one party
Let the buyer beware

Answer(s): A

Explanation:

Ultra vires is a Latin phrase, meaning "beyond the powers." Describes actions taken by government bodies or corporations that exceed the scope of power given to them by laws or corporate charters.
When referring to the acts of government bodies (e.g., legislatures), a constitution is most often the measuring stick of the proper scope of power.

Reference:

CIPS study guide page 42-43 LO 1, AC 1.2

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QUESTION: 84

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

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

Answer(s): C

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

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QUESTION: 81

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QUESTION: 82

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QUESTION: 83

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QUESTION: 84

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