L5M3 Practice Questions

Adjudication has strict timescales (this is one of the advantages of using this conflict resolution

method). It has roots in the construction industry and has been widely used since the 1990s. See p.76

for more information

A limitation of liability caps a company's exposure to risk. In SOME cases this may mean that the

responsibility passes to the other party- but not always. For this reason option 2 is correct and 4 isn't.

Option 1 is the definition of liquidated damages and 3 is just a made-up answer. See p.20 for more

information on Liability

2 - penalty clauses are not illegal. However they may be judged excessive in a court of law and

thrown out. Most contracts will instead opt for liquidated damages rather than a penalty clause. See

p.90

Verity can sue for damages. The order was placed over the phone meaning that there was a verbal

contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect.

There is no termination clause mentioned in the question so you can assume that there isn't one.

This means that the retailer is committing a breach of the verbal contract by cancelling the order.

Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!).

This question tests your understanding of when contracts can be terminated and remedies for

breaches. See p. 134.

Adjourning is not a stage. The 6 stages of negotiation are; preparation, opening, discussion, pro-

posal, bargaining and agreement. P.64

"the party indicates they no longer intend to fulfil their contractual obligations, usually in response to

a breach". This is the definition of 'repudiate' given on p. 128 Before the exam check you understand

the difference between repudiate, rescind and revoke. These are all ways contracts can end but are

slightly different.

In the event of a minor breach, CIPS says it is best to work with the defaulting party by conducting

progress meetings and collaboration. This is on p. 50 of the study guide

"A contract between an end customer and a company which has full responsibility for its perfor-

mance" is the correct answer. This is the definition of Prime Contract given on p. 47

The correct answers are as follows:

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The answer is liquidated damages as they're seeking compensation for loss.

The correct answers are 1 and 3. These are taken from p. 124. Option 2 is incorrect - this is the

definition of reliance damages. Option 4 is also incorrect- restitution damages are limited to pre-

agreed levels stated in the contract.