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CIPS Managing Contractual Risk Sample Questions (Q56-Q61):
NEW QUESTION # 56
Molly is a wedding planner who has just set up as a sole-trader. She has a meeting with a po-tential couple to organise their wedding. The couple is extremely risk adverse and have asked Molly to email them a copy of her insurances. Which insurances should Molly send? Select TWO
- A. Professional Indemnity Insurance
- B. Products Liability Insurance
- C. Public Liability Insurance
- D. Employers Liability Insurance
Answer: A,C
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
NEW QUESTION # 57
Which of the following will you put into box 1?
- A. compromise
- B. collaborate
- C. avoid
- D. compete
Answer: A
Explanation:
The correct answers are as follows:
The answer is compromise as they're seeking a solution that will satisy everyone.
NEW QUESTION # 58
Which of the following will you put into box 6?
- A. adjudication
- B. mediation
- C. arbitration
- D. litigation
Answer: B
Explanation:
The correct answers are as follows:
This is mediation because 1) it's private and 2) there's a third party present
NEW QUESTION # 59
Which of these statements about Guarantees are TRUE? Select 2
- A. A guarantee is a promise to repair or replace an item within a defined period of time
- B. A guarantor's responsibility is higher than the Principle
- C. A guarantor's responsibility cannot be higher than the Principle
- D. A Guarantee is a secondary obligation of a contract
Answer: C,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.
NEW QUESTION # 60
Which of the following will you put into box 5?
- A. Negotiation
- B. Mediation
- C. Arbitration
- D. Litigation
Answer: A
Explanation:
The correct answers are as follows:
This is negotiation - no third party is mentioned and there is a face-to-face meeting in private
NEW QUESTION # 61
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