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CIPS Commercial Contracting Sample Questions (Q36-Q41):

NEW QUESTION # 36
A company needs to source a product from overse
a. It wants to overcome technical barrier to cross-border trade by using standards in the specification. Which of the following is most likely to be incorporated into that specification?

Answer: D

Explanation:
Exporting enterprises must sometimes incur additional costs as they adapt their production to the changing legal requirements of the recipient country. Such requirements can thus create technical barriers to trade. Discrepancies between product rules adopted by different countries can involve numerous aspects: weight, size, packaging, ingredients, mandatory labeling, shelf-life conditions, testing and certification procedures etc.
One way to overcome these barriers is to adopt international standards. Overseas companies may be more familiar with international standards without looking at specific regulations of importing countries.
Reference:
- What is a technical barrier to trade?
- CIPS study guide page 88-89
LO 2, AC 2.1


NEW QUESTION # 37
Which of the following might be considered as advantages, to the supplier, of key performance indicators (KPIs)? Select TWO that apply.

Answer: B,D

Explanation:
From the supplier's perspective, well-constructed KPIs:
* Focus on critical success factors (A) - allows the supplier to allocate resources effectively and improve performance where it matters most.
* Clarify expectations (C) - clear KPIs reduce confusion and misunderstandings about what the buyer actually needs.
Options B, D and E are either negative or nonsensical from a supplier-advantage viewpoint:
* Cutting quality (B) is not a legitimate advantage; it increases risk.
* Sharing best systems with competitors (D) is definitely not an advantage.
* Ensuring they do not exceed performance levels (E) is not beneficial; suppliers often want to exceed targets for reputation or gain-share.
Reference: CIPS L4M3 Commercial Contracting - Benefits of KPIs for buyers and suppliers.


NEW QUESTION # 38
Which of the following are most likely to be liabilities of suppliers under a guarantee clause? Select

Answer: D,E

Explanation:
A guarantee is an agreement given by a trader to a consumer, without any extra charge, to repair, replace or refund goods that do not meet the specifications set out in the guarantee. A guarantee is usually issued by the manufacturer of goods or by a trader that provides goods as part of a service - replacement windows, for instance. Generally, a guarantee provider undertakes to carry out free repairs, for a set period of time, for problems that can be attributed to manufacturing defects.
Reference:
- Guarantees and warranties
- CIPS study guide page 157-159
LO 3, AC 3.2


NEW QUESTION # 39
Maximum Score: 1
Where a supplier is incentivised to deliver improvements that create added value for the buyer, this is described as what type of outcome?

Answer: C

Explanation:
Incentive mechanisms that reward suppliers for delivering improvements (such as cost reductions, quality enhancements, or innovation) create mutual benefit:
* The buyer gets better value or reduced costs.
* The supplier receives rewards such as bonuses, gain-share, or stronger relationships.
This is the definition of a win-win outcome (D).
Reference: CIPS L4M3 Commercial Contracting - Incentive contracts and win-win supplier relationships.


NEW QUESTION # 40
Which of the following contracts would be best suited to a 'variable pricing' arrangement?

Answer: C

Explanation:
Variable pricing is suitable to situations when the cost of certain elements of the product fluctuate unpredictably. For road building, asphalt fluctuates regularly. Furthermore, 5 years are long period, then variable pricing is the most appropriate method to achieve value for money and control budget.
A contract for window cleaning during the next three months is a short-term service contract, fixed price is the most suitable method.
A contract for the supply of lubricating oil for immediate delivery is an one-off contract, only fixed price is applicable.
A contract for the supply of 100 printing machines to be delivered next month is also an one-off contract.
Reference: CIPS study guide page 172-183
LO 3, AC 3.3


NEW QUESTION # 41
......

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