CIPS Exam L5M3 Topic 3 Question 50 Discussion

Actual exam question for CIPS's L5M3 exam

Question #: 50
Topic #: 3

[All L5M3 Questions]

Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required. What action can Verity Fashion take?

Asue for damages as the flip flops have already been made and this incurred costs

Bnothing- there is no written contract in place

Csubcontract the manufacturing of the flipflops to a third party

Dclaim on insurance

Show Suggested Answer

Suggested Answer: A

Verity can sue for damages. The order was placed over the phone meaning that there was a verbal contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect. There is no termination clause mentioned in the question so you can assume that there isn't one. This means that the retailer is committing a breach of the verbal contract by cancelling the order. Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!). This question tests your understanding of when contracts can be terminated and remedies for breaches. See p. 134.

by Luz at Apr 09, 2025, 02:30 PM

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