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CIPS Level 4 Diploma in Procurement and Supply Commercial Contracting

Commercial Contracting

Last Update Feb 1, 2026
Total Questions : 233

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Questions 2

Rochdale Ltd is looking for a new IT system to automate some of its operations. In designing the specification, procurement manager supposes that it should be done solely by the IT department who have deep expertise on this matter. Is procurement manager’s opinion appropriate?

Options:

A.  

No, because challenging the user's demand is the role of procurement

B.  

Yes, because designing complex specification would waste procurement manager’s time

C.  

Yes, because procurement professional has no expertise in IT sector

D.  

No, because designing complex specification could only be outsourced

Discussion 0
Questions 3

GPP, the employer, and Prosolia UK, the contractor, entered into five EPC contracts for the development of five different solar power generation plants in the United Kingdom. Four out of the five developments failed to be commissioned by the relevant due dates, with the delays ranging from 44 to 285 days.

Among other claims, GPP, acting through its two investment vehicles, claimed liquidated damages of £500 per day in all four contracts for Prosolia UK's failure to achieve completion of the plants by the due date. The liquidated damages claimed amounted to £1,804,221 across the four delayed contracts.

Prosolia, alongside various other defences, raised the defence that the liquidated damages provision in each contract was a penalty, and therefore unenforceable against it. Is Prosolia contractually obliged to make the payment to the plaintiff?

Options:

A.  

No, the amount claimed is too excessive and it may put Prosolia into insolvency. The clause must be void

B.  

No, the clause must be treated as a penalty clause which is unenforceable in UK

C.  

Yes, the amount is a reward to the employer as they have supervised and monitored the projects

D.  

Yes, the clause is a genuine estimate of possible losses that GPP may have suffered and therefore, it is enforceable.

Discussion 0
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Questions 4

Company A based in Canada signed a commercial contract with Company B in Egypt. Both countries are Contracting States to Vienna Convention on Contracts for the International Sale of Goods. The contract states that "The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of Canada". Which of the following set of rules will be applied if dispute between contracting parties occurs?

Options:

A.  

CISG

B.  

Canada’s legal system

C.  

WTO rules

D.  

Egypt’s legal system

Discussion 0
Questions 5

Which of the following is a key feature of liquidated damage clauses?

Options:

A.  

The amount of damage is predetermined

B.  

Liquidated damage is a penalty

C.  

The amount of liquidated damages must be exceptionally larger than the actual damages incurred

D.  

The liquidated damages are non-negotiable

Discussion 0
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