L4M3 CHAPTER 1 MOCK EXAM

1.Electro Systems PLC, are a Public Sector manufacturer of highly

technical solutions to the telecommunications industry. The
market in which it operates is fact paced, and ever changing with
latest inventions and developments.The products it procures are
high cost, and can be subject to lengthy lead times. Michael Jones,
the procurement Director believes that establishing framework
Agreements would be beneficial to the tendering process. How
could this assist them?
A.Improve supplier lead time
B.Enable the use of mini-competitions
C.Improve supplier product quality
D.Enable the use of e-tendering

2.Key performance indicators are used to.

A.Measure suppliers progress and achievement
B.Measure the quality of a tender submission
C. collect data about suppliers to inform future specifications
D.measure the risks identified with the contract

3.The common law principle Caveat Emptor is Latin for

A.Try before you buy
B.No returns acceptable
C.Purchase with care
D.Let the buyer beware

4. XTC LTD is developing a new product to improve it's competitive

advantage. They are looking for suppliers to use their expertise and
innovation to assist with the development of a new
component.What is the most appropriate form of specification to
use?
A.Service level specification
B.Conformance specification
C.Performance specification
D.Output bases specification

5.When providing a conformance specification, the buyer details

exactly what the required product or item must consists of. The
supplier may not know in detail or even at all what purpose the
item will play in the buyer’s business. The supplier is expected to
strictly conform to the buyers’ specification. The buyer therefore
bears the greatest risk if the specification fails. Which one of the
following might describe a conformance based specification?
A. The details of how the item is required to interface with the
other elements of the process.
B. Required safety levels and controls including the any relevant
standards that apply
C. Identification and emphasis on a brand name and model name
or model number
D. The criteria or methods to be used in measuring whether the
item has achieved its purpose

6.In-order for a contract to exist and be legally binding, there

needs to be certain elements present. Select the THREE that apply
A. There must be an agreement in the form of offer and
acceptance
B. There has to be money transferred at the time of the contract
C. There must be an intention to create legal relations
D. All parties must have contractual capacity
E. The request for quotation must be received at the correct time
F. There must be the opportunity to counter offer

7.What is the Vienna Convention a Treaty on?

A. Protection of Intellectual property rights
B. Free trade agreement in the EU
C. International sales law
D. Mandates the reduction of greenhouse gas emissions

8.A supplier sends a quote with their terms and conditions noted
at the bottom of the quote, the buyer then sends a purchase order
with their terms and conditions noted at the bottom of the order.
What would best describe this scenario?
A.Exchange of terms
B.Battle of forms
C.Dispute of conditions
D.Variation of contract

9.Which of the following is a disadvantage of using performance

specification?
A.They are costly to prepare
B.They limit the number of supplier who can quote
C.Difficult to assess the suitability of each quotation
D.Not allowed for use in public procurement

10.Which of the below is part of a conformance specification?

A.Materials dimensions, tolerances and dimensions
B.Material, innovation, performance and descriptions
C.Ideas, dimensions, tolerances and output
D.Ideas, innovation, tolerances and descriptions

11.An effective key performance indicator should be :

A.Standardized, meaningful, achievable, realistic, typical
B.Sustainable, measurable, analysed, realistic, timely
C.Specific, measurable, achievable, realistic, timely
D.Specific, meaningful, analysed, realistic, typical

12.A procurement manager decided to use a conformance

specification in an RFQ for the manufacturing of a specialist item
designed by their company. The company does not have the
capability to manufacture the item in-house but requires the item
to be made to their detailed specification. Was this the correct
thing to do?
A.Yes, as it means that the company will be able to get the most
cost effective price for the item from the chosen supplier
B.No, as it means that the chosen supplier will not be able to use
their expertise and knowledge to manufacture the item
C.Yes, as it means that the company will get exactly what it has
specified and meets it's specific requirements.
D.No. as the item will be of non standard construction and will not
be able to be used by other competitors
13.A procurement manager has been approached by a key supplier
requesting that the current 60 day payment terms between the
companies be reduced to 45 days due to cash flow problems.
After consideration, the procurement manager agrees to it but
requires an additional 5% discount on the supplier's price for doing
so. Is this the correct thing to do?
A.Yes, as the procurement manager is helping the supplier. So the
supplier should help the purchasing manager by reducing its costs.
B.No, as the procurement manager is taking unfair advantage of
the supplier's financial position to gain an advantage
C.No, the payment terms in the contract is 60 days and the
procurement manager should insist that the supplier accepts this
position.
D.Yes, the procurement manager has a cost saving target to
achieve and looks on the supplier's financial position as an
opportunity to achieve this target.

14.How should a key performance indicator (KPI) be used in

commercial contracting
1. As a price negotiation tool pre-contract
2. A metric for managing performance
3. To focus on getting the important things right
4. To maintain a library subjective data
A. 1 and 3 only
B. 2 and 3 only
C. 1and2only
D. 3and4only

15.Which of the following are criteria that the ISO 14000 series
covers
1.Life-cycle analysis
2. Continuous improvement
3. Financial information
4. Climate change
A.1 and 4 only
B.2 and 3 only
C.3 and 4 only
D.1 and 2 only

16.In situations where there are many documents written by

different stakeholders in long-term projects, where it is likely that
individual stakeholders and points of contact, such as the project
manager, may change, which of the following would be most
appropriate to use to limit exposure to risk?
A.Battle of the forms
B.Hierarchy of stakeholder clause
C.Order of precedence clause
D.List of documents
17.An advert in a news agent's window read: 'Hoover 2012, £50
one. Tel: 0208 888 2124'. Karl rang the number and, having
enquired about the Hoover said, 'I'll give you £25 for it.' Karl's
statement is
A. request for information
B.An invitation to treat
C.An offer
D.An acceptance

18.In a contract between two parties, consideration must have

which of the following to meet its sufficiency requirements?
1. Consideration must be provided by one party of the contract to
another
2. Consideration need to have a monetary value
3. Consideration or exchange needs to be equal
4. Consideration needs to be present or future not past
A.1 and 2 only
B.2 and 3 only
C.3 and 4 only
D.1 and 3 only

19. An agreement between the buyer’s bank and the seller’s bank
to transfer funds due under a contract upon presentation of
valid documents, providing a guarantee that the payment will
be made if valid documentation is presented. Which of the
following does the above statement best describe?
A. Letter of credit
B. Documentary credit
C. Documentary collection
D. Exporting

20.Super Clean Group (SCG) is a large facilities management

organisation. One of its procurement officers (PO) has a meeting
with a cleaning company about a potential future contract. The
cleaning company has already submitted a quote to the PO, based
on a specification that was provided. The PO explained that he had
the authority to commit SCG to the contract and confirmed that
the price was acceptable for the services being offered.The PO
explained that he had the authority to commit SCG to the contract
and confirmed that the price was acceptable for the services being
offered. The PO and the cleaning company agreed that the
contract would commence in one month’s time. In addition to the
offer and acceptance which of the following from this scenario
makes this a legally binding contract?
1. Warranty
2. Precedence
3. Consideration
4. ⁠4. Capacity
A.2 and 3 only
B.1 and 2 only
C.1 and 3 only
D.3 and 4 only

21.Mable sees a coat displayed in a shop window with a price tag

of £100 in it.
When Mable goes into the shop to buy it, the shop owner says the
window display had an incorrect price on and the coat is actually
£120.
Mable argues that the shop has to honour the £100 - is she
correct?
A.Yes, the coat was advertised at £100 so the shop is legally bound
to honour it.
B.No, the shop will make a loss on the coat so should not have to
sell at £100
C.No, the display is an invitation to treat so the shop can legally
amend the price
D.Yes, the display is an invitation to treat and therefore the shop is
bound to sell for £100

22.You are a Procurement manager for a successful electrical

component reseller and distributor.
The company presently carries stock of over fifty thousand fifty
different items. Some of which may be variances of thesame
product or similar product from different manufacturers. The
managing director of the business is looking to increase the margin
of products sold and has asked for your support. It is a competitive
industry with a customer base that will be resistant to price
increase. Which of the following could support this request?
A.Improve the quality of products purchased
B.Increase the range of products sold
C.Standardize the products purchased
D.Reduce the range of products purchased

23.You are a buyer working in a busy procurement office.

A colleague from another department would like to procure some
new electrical equipment which is essential to their operation.
They are specifying a branded version which is almost double the
cost of some acceptable alternatives available in the market. You
are Keen to ensure that their preferred product represents best
value. What are your consideration?
1. The inspection cost of the alternative product
2. The overall cost of the purchase
3. The quality of the branded product
4. The validity of the branded product
A.1 and 3 only
B.3 and 4 only
C.2 and 4 only
D.1 and 2 only

24.Which of the following will terminate an offer?

1. Revocation
2. Acceptance
3. Intention
4. Consideration
A.1 and 2 only
B.3 and 4 only
C.2 and 3 only
D.1 and 3 only

25.Where a company is negotiating a contract but it is worried

about a potential ‘act of God’ impacting its ability to perform
its obligations, it could construct which of the following to
allow it to terminate its obligations?
a. Force majeure clause
b. Contract variation clause
c. Limitation of liability
d. Variation of price clause
26.Which of the following will terminate an offer?
1. Revocation
2. Acceptance
3. Intention
4. Consideration
A.1 and 2 only
B.3 and 4 only
C.2 and 3 only
D.1 and 3 only

27. You are a senior buyer in a large manufacturing company.The

engineering team are looking for a product that will assist them in
a new innovation project. The technology is evolving and the
product supplied is likely to be bespoke to the supplier
You are suggesting the use of a performance specification as part
of the tender.
What is the main reason for this?
A.The cost of the product is likely to be cheaper
B.This places the responsibility for success with the supplier
C.The tender process is likely to be faster
D.This will allow a comprehensive description of the product
28. Swift company wishes to issue an invitation to tender for a
range of suppliers. They do not wish to limit the number suppliers
who can respond. Which form of tender process is the best one to
use?
A. Restricted open tender
B. Selective tender
C. Selective closed tender
D. Open tender

29. Denny is putting together the final version of a contract to send

out to a supplier. He places certain documentation into additional
contract schedules at the end of the main contract. Which of the
following would be suitable inclusions to the additional schedules?
Select TWO that apply?
A. Financial statements
B. Health and safety commitments
C. Supplier references
D. Non- disclosure agreement
E. A blank RFQ form

30.Which of these are remedies for misrepresentation

1. The contract is void
2. Rescission of the contract
3. Caveat Emptor
4. Damages
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 2 and 4 only