CIPS Updated L4M3 Exam Questions and Answers by arielle

Procurement staff in the Hospital is forcing suppliers into fixed price contract. If the costs generally rise, supplier may operate at a loss. This situation can disrupt the relationship, that is the reason why some suppliers refusing to deal with BDH and a few going out of business mid-way.

Alternative methods could be variable pricing arrangement. This method would reimburse the fluctuation of market price. It will also benefit buyer if the market price drops. This type of arrangement should be applied to long-term contracts (i.e. 18 months or more).

Generally, under the Sale of Goods Acts (in UK, Singapore, Australia,...) or Commercial Codes (in France, Germany, Vietnam,...), the sale contracts have the following implied terms:

- the seller has the right to sell the goods. This is also a condition of the contract

- the goods are free from undisclosed security interests

- the goods supplied under the contract will be reasonably fit for any purpose which the buyer made known to the seller

- sales of unseen goods will be of merchantable quality, and match their description and conformwith a sample.

- Passing of risk

- Passing of possession and title

The ITT is issued by the buyer and typically includes:

Requirements, scope, and delivery milestones (C).

Evaluation criteria, instructions to tenderers, contract conditions, etc.

Supplier rates and liquidity ratios belong in the supplier response or financial evaluation. BAFO is a later negotiation step, not content of the ITT itself.

In order to form a contract to come into being, there are five conditions:

- Offer

- Acceptance

- Consideration

- Intention to be legally bound

- Capacity to contract