L4M3 CIPS Commercial Contracting Free Practice Exam Questions (2026 Updated)

BS 7373-1:2001 Product specifications. Guide to preparation gives guidance on layout, preparation and management. The subject has been treated in a generic way and guidance can be used in the preparation of all types.

BS 5864:2019 is the standard for installation and maintenance of gas-fired ducted air heaters of rated heat input not exceeding 70 kW net (2nd and 3rd family gases). Specification

BS 5975:2019 is the standard for code of practice for temporary works procedures and the permissible stress design of falsework.

BS EN 60601-1-11:2015 is the standard for medical electrical equipment. General requirements for basic safety and essential performance. Collateral Standard: Requirements for medical electrical equipment and medical electrical systems used in the home healthcare environment.

Without further explanation, a schedule may be deemed to form an integral part of the obligations of either or both parties. Obviously, the scope or binding nature of such schedule depends on the way it is referred to in the obligatory language of the main agreement. Accordingly, merely attaching the general terms and conditions of sale without explaining to which part of the sale they apply or which provisions apply does not subject a sale pursuant to the body text of the agreement to those general terms and conditions.

Subcontracting is the practice of assigning, or outsourcing, part of the obligations and tasks under a contract to another party known as a subcontractor.

If a party is induced to enter a contract based on a misrepresentation, the contract becomes voidable at the option of the misled party. This means the misled party can either rescind (cancel) the contract or affirm it and seek damages. The nature of the misrepresentation (fraudulent, negligent, or innocent) affects the availability of damages.

An untrue statement of fact or law made by Party A (or its agent) to Party B, which induces Party B to enter a contract with Party A thereby causing Party B loss. An action for misrepresentation can be brought in respect of a misrepresentation of fact or law.

There are three types of misrepresentation:

- Fraudulent misrepresentation: where a false representation has been made knowingly, or without belief in its truth, or recklessly as to its truth.

- Negligent misrepresentation: a representation made carelessly and in breach of duty owed by Party A to Party B to take reasonable care that the representation is accurate. If no "special relationship" exists, there may be a misrepresentation under section 2(1) of the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds for believing its truth.

- Innocent misrepresentation: a representation that is neither fraudulent nor negligent.

The remedies for misrepresentation are rescission and/or damages. For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. For innocent misrepresentation, the court has a discretion to award damages in lieu of rescission; the courtcannot award both (see section 2(2) of the Misrepresentation Act 1967). For more information, see Practice note, Misrepresentation.

The best practice for managing a potential conflict of interest is:

To ensure transparency,

To treat all capable suppliers fairly,

To avoid preferential treatment.

Therefore, Esther should include SCS among several capable suppliers in a structured market engagement process (D). This avoids favouritism, provides a broad market view, and maintains ethical standards.

Options like “off the record” or only declaring to SCS miss the key requirement: fair and open treatment of multiple suppliers.

The core elements of an SLA are set out below:

- Service definition

- Quality definition

- KPI details

- KPI management response

- Operational performance and management response

- Constraints or mitigating factors

The main advantage of a model form contract is:

The parties do not need to draft a complex contract from scratch each time,

While still allowing some adaptation to suit the particular project.

This is exactly what option C states.

Options A and B can be features of many contracts (not unique advantages of model forms). Option D is true in practice (you still need legal advice for major changes), but it is not an advantage.

When the SLA is a schedule or an appendix to the contract, it should clearly state the following:

1. KPIs: how they are to be measured, who measures them and how often

2. How the measurements convert into scores

3. Any other service level standards, which may be of lesser importance than the KPIs

4. Minimum acceptable standards or scores in each case

5. Range of scores both above and below the minimum acceptable

6. Any mitigating factors which might apply in the event of poor performance

7. Any time period permitted in which to remedy a situation or poor performance.

In this question, "2. Minimum qualification of supplier staffs" and "4. On time service delivery" are the KPIs, while "1. How often the service is measured" is the frequency in which the KPIs are measured.

The remedies available in the event of poor performance should be set out in the body of the contract, along with those for any other contractual breach. These clauses should be cross-referenced in the SLA.

Service level agreement often sets out the minimum quality standards of the services provided, remedies if that standards are not met, consequences if the targets are exceeded. Penalty clauses and service credits are remedies that are often used in conjunction with service level agreement to ensure the performance and to compensate the purchaser if targets are not met.

Creating a detailed specification and publicly advertising the requirement are key preparatory steps in issuing an ITT (Invitation to Tender). These ensure that suppliers understand the requirement and have the opportunity to respond, promoting transparency and competition.

Reasons for including social and environmental criteria may include the following:

- Expected Cost Savings and Financial Motives

- Management Support and Commitment

- Employees

- Altruistic Values

- Power Imbalances along the supply chain

- Image and Reputation

- Government Regulations

- Customers

- Competitors

Management, employees, government, customers and competitors are among the stakeholders that make pressures to the organisation on social and environmental criteria.

Hire purchase is an arrangement for buying expensive consumer goods, where the buyer makes an initial down payment and pays the balance plus interest in installments. Ownership is not transferred until the end of the agreement, hire purchase plans offer more protection to the vendor than other sales or leasing methods for unsecured items. That's because the items can be repossessed more easily should the buyer be unable to keep up with the repayments.

The answer is that Company B has the right to take repossession of the lorry.

Reducing specification detail can be safely managed by referencing industry standards and inviting suppliers to propose solutions. This supports flexibility and innovation while ensuring clarity and alignment with established quality benchmarks. Acronyms and samples (options 1 and 4) are not substitutes for formal specification methods.

Advantages of using fixed pricing arrangement are as below:

- Budget/income certainty - prices are fixed up front and should not change

- The impact of changes to the supplier's cost base is not fed through to the purchaser. If costs diminish, the supplier will benefit from this, and if costs rise, the purchaser will benefit

Markup is the percentage between the profit and costs. The cost is $350, markup is 11%. So final price is: 350 + 350x0.11 = 388.5

An insurance policy transfers a specific set of risks such as the fire and flood risk for a particular asset.

The legal liability does not transfer to the insurance company (known as insurer).

Framework agreements allow for pre-approved suppliers to be used over a contract period with simplified ordering processes. A key benefit is the use of mini-competitions among these suppliers to secure value and innovation without repeating the full tender process. This approach is highly effective in dynamic sectors like telecommunications.

Consideration only appears in common law countries. Below are some examples of what is and what is not consideration:

- Past consideration is something that has already been done or given. This cannot act as consideration

- Implied consideration: if the detail of a promise to pay is expressed after the provision of goods or services, but there is an implication that such promise would be forthcoming, this may (depending on the facts) be valid consideration.

- A promise given to a third party: this is not normally consideration, and is based on a concept known as privity of contract. Anyone who is not a party to the contract, even if they are beneficiary of it, cannot sue if the terms of the contract are breached.

- A promise to perform over and above an existing obligation: This is always consideration

Input specifications detail exactly how a supplier must provide the service or make the product. While this ensures compliance, it limits the supplier's ability to innovate or offer alternative, potentially more efficient solutions. Performance specifications, in contrast, focus on outputs and encourage innovation.