L5M3 CIPS Managing Contractual Risk Free Practice Exam Questions (2025 Updated)

Explanation

1 is the correct answer. This is a direct quote from p. 104 of the study guide.

Explanation

No - There is no consideration. For a document to be considered a contract there must be consideration. This means something of value must be exchanged. In this example John gives Larry something but Larry doesn't give John anything. Therefore there is no consideration and this is not a contract. See p.12

Explanation

The correct answers are as follows:

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This is consequential loss. Brian Air is going to lose the profits from the sales of the flights it had sold. Now those flights won't go ahead Brian Air can claim for consequential loss which would help balance the books.

Explanation

Adjourning is not a stage. The 6 stages of negotiation are; preparation, opening, discussion, pro-posal, bargaining and agreement. P.64

Explanation

The correct answer is "only future obligations of the parties are excused and discharged" - all cur-rent and past obligations need to be fulfilled, or remedied (e.g. through liquidated damages). When an innocent party terminates a contract, they are still obliged to fulfil their own obligations. P.47

Explanation

This is Adjudication. The other answers are incorrect- litigation involves the court. Conciliation and mediation do not provide binding decisions. P. 143

Explanation

Negotiation is usually the default method for resolving disputes. This is a direct quote from p.63

Explanation

If you're not happy with the decision of an adjudication you can appeal the decision. So option 2 is correct. If the appeal is turned down then unfortunately there's not much more you can do as adjudication is binding and legally enforceable. See p. 143 for more info on adjudication

Explanation

The correct answers are as follows:

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This is negotiation - no third party is mentioned and there is a face-to-face meeting in private

Explanation

A Clause for Default 'allows the lender to demand full payment of the outstanding balance'. See p.102. And always read the small print before you sign a loan agreement :)

Explanation

The correct answers are as follows:

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This is adjudication. Adjudication is the only option which has a specified timeframe.

Explanation

The correct answers are as follows:

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Subcontracting is the correct answer as they're using another company to fulfil the contract

Explanation

The correct answers are as follows:

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This is mediation because 1) it's private and 2) there's a third party present

Explanation

Indemnity- this is the definition given on p. 20

Explanation

A limitation of liability caps a company's exposure to risk. In SOME cases this may mean that the responsibility passes to the other party- but not always. For this reason option 2 is correct and 4 isn't. Option 1 is the definition of liquidated damages and 3 is just a made-up answer. See p.20 for more information on Liability