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Here are sample CIPS Managing Contractual Risk (L5M3) Exam questions from real exam. You can get more CIPS Level 5 Advanced Diploma in Procurement and Supply (L5M3) Exam premium practice questions at TestInsights.

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Question 1

Which of the following are advantages to seeking a solution to conflict via litigation?

Athe process provides certainty that an outcome will be reached

BThere is no confidentiality

CThe decision can be made by someone who isn't an expert in their field.

DThe process is quick and cost-effective

Correct : A

The correct answer is 1 'the process provides certainty that an outcome will be reached'. Options 2 and 3 are true statements but they are not advantages of litigation, they are disadvantages. Option 4 is false - litigation is a long and costly process. See p. 85 for more information on litigation

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Athe process provides certainty that an outcome will be reached

BThere is no confidentiality

CThe decision can be made by someone who isn't an expert in their field.

DThe process is quick and cost-effective

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Question 2

Sam is a factory manager and has purchased a new fixed asset on a loan purchase agreement. There is a forbearance agreement between the Factory and the provider. What does this mean?

Athe lender agrees to give the breaching party a period of time as an extension by which to meet their obligations

Bthe lender requires the buyer to assign a guarantor in case they cannot make payments

Cthe lender is able to demand full payment of outstanding balances in case of none pay-ment

Dthe lender is able to charge interest on the purchase in line with RPI

Correct : A

1 is the correct answer. This is a direct quote from p. 104 of the study guide.

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Athe lender agrees to give the breaching party a period of time as an extension by which to meet their obligations

Bthe lender requires the buyer to assign a guarantor in case they cannot make payments

Cthe lender is able to demand full payment of outstanding balances in case of none pay-ment

Dthe lender is able to charge interest on the purchase in line with RPI

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Question 3

When considering consequential loss, can a cap be placed on the amount claimed?

Ayes- this is known as a limitation of liability clause

Byes- this is known as a pre-estimate of damages

Cno- there can be no cap to either direct loss or consequential loss

Dno- there can be a cap to direct loss but not to consequential loss

Correct : A

Yes- this is known as a limitation of liability clause. See p. 112 for more details

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Ayes- this is known as a limitation of liability clause

Byes- this is known as a pre-estimate of damages

Cno- there can be no cap to either direct loss or consequential loss

Dno- there can be a cap to direct loss but not to consequential loss

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Question 4

Lisa has a contract with an internet provider and the contract stated the need for Wi-Fi to be online 100% of the time. The Wi-Fi has only been available 97% of the time. In order for Lisa to claim compensation from her internet provider, which of the following would need to be present in the contract?

Achange control

Bliability clause

Cservice credits

Dsubcontracting

Correct : C

This would be service credits. If this is present and the contract stated 100% online access- Lisa could claim 3% of her money back. See p.112 for information on service credits

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Achange control

Bliability clause

Cservice credits

Dsubcontracting

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Question 5

Restitution damages are often calculated before contracts are signed and are clearly stated within a contract. Which of the following statements is not true?

Arestitution damages means you are unable to claim for future losses

Brestitution damages may leave the breaching party in a worse position than they were in before the contract began

Crestitution damages are calculated based on how much the breaching party gained, ra-ther than how much the innocent party lost

Drestitution damages cannot be mitigated by the actions of the innocent party

Correct : D

'restitution damages cannot be mitigated by the actions of the innocent party' is the untrue state-ment out of these four. The general principle of Restitution Damages is that the innocent party is expected to be proactive in mitigating the consequences of any breach and should not allow costs to spiral out of control. See p. 124

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Arestitution damages means you are unable to claim for future losses

Brestitution damages may leave the breaching party in a worse position than they were in before the contract began

Crestitution damages are calculated based on how much the breaching party gained, ra-ther than how much the innocent party lost

Drestitution damages cannot be mitigated by the actions of the innocent party

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