Question 1

When should liquidated damages clauses be written into a contract?

Options :

A : When the breaching party wants to exclude all its liabilities

B : When the innocent party wants to punish the breaching party.

C : When the loss to the innocent party will be either too uncertain or too difficult to calculate.

D : When the court approves the damages amount before the contract is executed.

Answer: C

Question 2

You are to do the KPIs and targets for international supplier and the following was done
1. Delivery in an hour
2. Return orders in an hour
Is that a good thing or not?

Options :

A : Yes, the higher the targets are, the better the outcomes will be

B : No, because the KPIs are not a realistic and justified

C : Yes, because these targets will propel the suppliers to continuous improvement

D : No, the local suppliers are always the best choice

Answer: B

Question 3

Sharaton Foods Holding is looking for a vegetable harvesting and packaging system. They use the performance specification in the tendering process. What are the benefits of using this type of specification?

1. Provide opportunities for innovation
2. Potentially limit the competition among the suppliers
3. Require less effort to produce a specification
4. Allow the end user to provide details on technical aspects

Options :

A : 1 and 4 only

B : 1 and 3 only

C : 1 and 2 only

D : 2 and 3 only

Answer: B

Question 4

A procurement manager is preparing a long-term contract with a major supplier. She decides to use the variable pricing arrangement using price indices. The payment terms describe the circumstances and mechanism where the price is allowed to change. In order to successfully manage this type of contract, the buying organisation should have...?

Options :

A : Good market knowledge

B : Economy of scale

C : Value for money

D : Selection of base year

Answer: A

Question 5

Sally places a purchase order to the supplier for some components that her company requires. The supplier delivers the goods as she asks, but the quality assurance team finds that these components are defective and unfit for the company's operations. Which document is the ground to decide whether the goods received are fit for purpose?

Options :

A : Code of conduct

B : CSR policies

C : Specification

D : Pre-qualification questionnaire

Answer: C