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Free L5M3 Exam Braindumps (page: 4)

Page 3 of 31
PDF with 120 Questions

Fruity McFruitFace is an exporter of fruit.
Which of the following payment terms would be most advantageous for it?

  1. open account
  2. documentary collection
  3. documentary credits
  4. advance payment

Answer(s): D

Explanation:

Exporters prefer advance payment - this puts the risk with the importer / buyer. There's a table of these four terms on p.36. An importer would prefer an open account arrangements. The other two options are in the middle and the risk is more equally split between the two parties.



A contract term which is difficult to classify at the time of drafting a contract is known as?

  1. condition
  2. warranty
  3. consideration
  4. innominate

Answer(s): D

Explanation:

Innominate - the conflict resolution process would determine if the clause is a condition or a war- ranty. Before there's a breach there's no way to know, so it's classed as an Innominate Term. P. 43. Types of contract terms comes up a lot in the exam. Learn these.



An exchange of written documents between a buyer and supplier, each detailing their own Terms and Conditions is known as the Battle of the Forms.
Who generally wins the Battle?

  1. The party who issued the first document
  2. The party who issued the last document
  3. The party with the greatest liability
  4. The party who commits a breach

Answer(s): B

Explanation:

The Battle of The forms is won by the party who sends the last form. This is referred to in the study guide as 'the last shot wins'



Logan Gin Distillery is creating a contract for one of its new suppliers. It is a complicated item that they are ordering and if things go wrong, it would have an extremely negative impact on production, and therefore on revenue. However it is impossible to say what the cost of this would be if things were to go wrong.
What type of clause should be included in the contract?

  1. liquidated damages
  2. unliquidated damages
  3. penalty clause
  4. service credit

Answer(s): C

Explanation:

Unliquidated damages would be the best to include as there is no way of identifying a figure for liquidated damages. This would be the safest thing for the buyer to do. P.108 - section on Unliqui- dated Damages.






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