Important CIPS L5M3 Exam Questions

Answer: D

Explanation:

They can claim damages but not terminate the contract. If Blue company has broken a Condition, they would be able to terminate the contract, but this isn't the case for a breach of a Warranty. See p.43 for more details

Answer: A, D

Explanation:

'A Guarantee is a secondary obligation of a contract' and 'A guarantor's responsibility cannot be higher than the Principle' are the correct answers. Guarantees are explained on p.28. Be careful not to confuse this with Warranty. A promise to repair or replace an item within a defined period of time is the definition of a warranty. That was put in there to trick you. Sorry. Remember a Guaran-tee is to do something when the Principle of the contract fails to do it. It's most common in leasing agreements- if you're a young person, you'll often need a responsible adult / parent to sign the lease as your Guarantor. As a Guarantor, they promise to pay the rent if you're unable to. Legally they can't be asked to do any more than you are assigned to do in the contract. So if your rent is 500 a month, that's all they can be asked to pay if you don't pay it. The primary obligation is between you and the landlord. The secondary obligation is between the guarantor and you.

Answer: C, D

Explanation:

The correct answers are indemnity insurance and public liability insurance. Molly doesn't have any products so this wouldn't be required- she's a consultant. As a sole-trader she doesn't have employees so doesn't need Employer's Liability Insurance. The book does not go into much detail about types of insurances - but this is a known exam topic. So if you aren't confident on these four types of insurance and when you'd expect a supplier to have them - do some extra research before the exam. Insurance types are briefly mentioned on p. 25

Answer: D

Explanation:

Adverts are invitations to treat - not offers. Therefore the travel agent isn't bound to provide the discounted flight. See p.3 for more information on offers and ITTs

Answer: C

Explanation:

Litigation is the correct answer. This is not a way in which a contract can end- it is a conflict resolution method. The three ways in which a contract can end are; performance, agreement and breach. See p. 42 for more details on how contracts end