QUESTION: 17

An indemnity clause should contain which of the following pieces of information 1) duties of both parties 2) a monetary limit 3) insurance levels 4) details of the breach 5) a time limit

1,2,5
1,3,4
2,4,5
3,4,5

Answer(s): A

Explanation:

Indemnity clauses should contain duties of both parties, a monetary limit and a time limit (1 2 and 5). It should also detail what types of costs are covered. These four points are explained on p.61. An indemnity clause doesn't necessarily signal a breach in contract, and levels of insurance are not relevant here.

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QUESTION: 18

Which of these is a type of Intellectual Property protection? Select TWO

Warranty
Condition
Patent
Trademark

Answer(s): C,D

Explanation:

Patent and Trademark are types of IP protection. There are 4 in total - the other two are copywrite and trade secret. This is covered on p.63-64 of the study guide

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QUESTION: 19

Which of the following is an example of force majeure?

The supplier delivers materials late due to a breakdown
The supplier asks for an uplift in prices
The supplier is under criminal investigation for fraud
The supplier's factory is hit by a hurricane

Answer(s): D

Explanation:

The hurricane is the force majeure event. Natural disasters such as this, or any events outside of the parties' control could be considered force majeure. This is a popular exam topic - see p. 66 in the study guide

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QUESTION: 20

Petra Ltd is a manufacturer of upmarket baked goods and they have a range which is gluten free and therefore suitable for customers who have an intolerance of wheat. For this reason Petra Ltd is very strict about the ingredients that it sources. It's main supplier has provided written agreement that they will test all ingredients in their processing factory to ensure that they are suitable for the gluten free diet before delivery is made, and once delivery is made the materials will be deemed accepted by the buyer. Is Petra right to accept this arrangement?

yes- this reduces the risk of unsuitable materials entering Petra's factory
yes- this arrangement places the risk on the supplier rather than Petra
no- Petra should arrange for additional tests to be conducted on the deliveries and only accept them once these tests have been completed
no - this arrangement is unacceptable and Petra should void the contract

Answer(s): C

Explanation:

Petra should arrange for additional tests to be conducted. This question is based on a real example in the exam. In this scenario there is still significant risk for Petra even if the supplier is testing the materials. The supplier could miss something, or forge the results with disastrous consequences for Petra's customers. Moreover it would severely damage Petra's reputation. Therefore the wise thing would be for Petra to conduct additional tests in-house to ensure they are happy with the products and only then accept them. This could be an audit of 10% of deliveries to ensure compliance. Acceptance Testing is discussed in the textbook on p.70

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QUESTION: 17

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