CIPS Exam L5M3 Topic 2 Question 36 Discussion

Actual exam question for CIPS's L5M3 exam

Question #: 36
Topic #: 2

[All L5M3 Questions]

Logan Gin Distillery is creating a contract for one of its new suppliers. It is a complicated item that they are ordering and if things go wrong, it would have an extremely negative impact on production, and therefore on revenue. However it is impossible to say what the cost of this would be if things were to go wrong. What type of clause should be included in the contract?

Aliquidated damages

Bunliquidated damages

Cpenalty clause

Dservice credit

Show Suggested Answer

Suggested Answer: C

DEF must deliver the pasta required by ABC is the correct answer. Specific performance is when the innocent party is rewarded by receiving what was initially negotiated - in this case the delivery of pasta. It's basically a posh way of saying that the court mandates you to do what the contract says. See p. 129 for information on Specific Performance.

by Corinne at Sep 11, 2024, 01:56 PM

Limited Time Offer

25%

Off

Get Premium L5M3 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Catalina

1 months ago

D) service credit? Really? What is this, a rewards program for bad performance? I'll stick with A) liquidated damages, thank you very much.

upvoted 0 times

Aide

24 days ago

C) penalty clause might be too harsh, liquidated damages seem more reasonable.

upvoted 0 times

...

Tony

26 days ago

B) unliquidated damages could be risky, better to go with a safer choice.

upvoted 0 times

...

Shawna

1 months ago

A) liquidated damages are a safer option in case things go wrong.

upvoted 0 times

...

Lashaunda

2 months ago

Definitely A) liquidated damages. It's the only way to ensure the distillery is properly compensated if things go sideways. Plus, it's a fancy legal term, so it must be the right answer.

upvoted 0 times

...

Delila

2 months ago

Hmm, I'm leaning towards C) penalty clause. That way, the supplier knows there will be serious consequences if they mess up. Gotta keep them on their toes, you know?

upvoted 0 times

Elvera

10 days ago

D) service credit

upvoted 0 times

...

Colene

11 days ago

C) penalty clause

upvoted 0 times

...

King

20 days ago

B) unliquidated damages

upvoted 0 times

...

Kenny

24 days ago

A) liquidated damages

upvoted 0 times

...

Josefa

25 days ago

D) service credit

upvoted 0 times

...

Emmett

1 months ago

C) penalty clause

upvoted 0 times

...

Stephania

1 months ago

B) unliquidated damages

upvoted 0 times

...

Britt

1 months ago

A) liquidated damages

upvoted 0 times

...

Vanda

2 months ago

I'm not sure about this one. I was thinking B) unliquidated damages might be the way to go since the impact is so uncertain. But I could be wrong.

upvoted 0 times

...

Elouise

2 months ago

I think the answer is A) liquidated damages. This seems like the most appropriate clause to include in the contract since the cost of things going wrong is impossible to predict.

upvoted 0 times