Which of the following may be a benefit for purchaser in using call off contract?
Answer(s): C
Benefits for the purchaser in using call off contract are as below:- The benefit of a call off contract is that they allow the supply of materials, goods and services to be secured over multiple delivery dates across the length of a project.- Agreed prices, either fixed or pre-agreed mechanism for adjustment. This helps with setting and controlling budgets.- Simple order mechanisms at the point of need- Schedules of rates pricing enables electronic procure-to-pay systems, which gives greater control and visibility of spend- The value of spend ad length of contract justify the cost of proper market engagement and tender or negotiation processes resulting in better value for money- The longer the contract, the greater the opportunities for aligning working practices to create joint efficiency.
- Call Off Contracts What are they and how are they used?- CIPS study guide page 63-64 LO 1, AC 1.3
A procurement professional is drafting payment terms for a commercial contract. He is considering about payment method if defective products are found. Which of the following should be embedded in payment terms to control this issue?
Answer(s): D
Retention money is the payment for a service or product that is withheld pending the completion of some specified condition. For example, buyer may withhold the amount due until the supplier replace all defective goods.Pay-less notice is the notice under a contract which states that the invoice will only be partially paid because of some issues such as supplier has to pay the damages. Remedies for late payment are remedies that supplier may seek when a buyer pay it later than the stated payment terms. Normally, the buyer will be charged an interest rate.
CIPS study guide page 190-191 LO 3, AC 3.3
Which of the following should be done by procurement professionals right after obtaining a pre- written specification for a critical item so that the added value will be the greatest?
A previously used specification must always be robustly challenged to see how well it fits the proposed circumstances. Aspects which appear not to fit should be analysed to understand why they were included in the sample specification and whether this changes the view on whether or not they should be omitted or changed.
CIPS study guide page 80 LO 2, AC 2.1
A fashion company is drafting a specification for an order in next year. The company wants to expand its supply base in low cost countries. The procurement department is considering applying standard ISO 3759 on method for the preparation, marking and measuring of textile fabrics, garments and fabric assemblies for use in tests for assessing dimensional change after a specified treatment. Which of the following should be taken into account when embedding this standard into the specification?
Answer(s): A
Standards are incorporated into specifications by simply cross-refering to the relevant standard by its number and date of publication. It is important to include the date of publication. All standards are reviewed from time to time and their content changes. The absence of the publication date will lead to disrupts over which version of the standard actually applies to the contract.
CIPS study guide page 85-89 LO 2, AC 2.1
A tire manufacturer entered into a contract with a distributor. In the contract, the distributor is prohibited from selling the tire under the price list. The distributor must pay $5 for each tire sold in breach. The amount of $5 is known as...?
This scenario is in fact based on a famous case law: Dunlop Pneumatic Tyre Company v New Garage & Motor co [1915] AC 79. In this case law, the House of Lords identified the clause as liquidated damages, and therefore enforceable.However, if this case had happened in 2015 or afterwards, there would be some legal issues:- The price agreement is prohibited by Competition Act 1998- If the agreement is allowed by Competition Act, as in the case Cavendish Square Holding BV (Appellant) v Talal El Makdessi (Respondent), the clause can also be identified as a penalty and it is still enforceable.
CIPS study guide page 158-159 LO 3, AC 3.2
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