[Mar 18, 2026] ITPassLeader L4M3 dumps & CIPS Certifications sure practice dumps
CIPS L4M3 Actual Questions and Braindumps
CIPS L4M3 exam is a level 4 qualification, which means that it is designed for procurement professionals who have some experience in the field. Candidates who pass the exam will gain a deep understanding of the legal and commercial aspects of contracting, as well as the tools and techniques used to manage contracts successfully.
NEW QUESTION # 29
Which of the following KPIs is qualitative?
1. Openness and co-operation of supplier
2. Responsiveness of supplier
3. Customer satisfactory ratings
4. Cost management
5. OTIF deliveries
- A. 2 and 3 only
- B. 1 and 4 only
- C. 2 and 5 only
- D. 1 and 3 only
Answer: D
Explanation:
Qualitative KPIs are based on pure opinions about how well or otherwise the goods are performingor the service is being delivered. Most often, these will be linked to, or convertedinto, a numerical measure.
However, such satisfaction surveys often also include free fields for respondents to explain why they feel the way they do, and what they might have liked to have been different.
On the other hand, quantitative KPIs are based on numerical measure with either definite number (e.g., actual number of orders incomplete or otherwise inaccurate during the time period) or as a percentage (e.g. number of inaccurate orders as a percentage of the total number of orders).
Openness and co-operation means that supplier is open and co-operative in its relationship with purchaser, e.
g., in terms of joint problem solving. This KPI is qualitative since it is measured by individual judgement.
Responsiveness of supplier means the supplier responds rapidly to requests for information and support without having to be chased. It is measured by the number of times requests chased as a percentage of number of requests. It is a quantitative KPI.
Customer satisfactory ratings means the level of customer's satisfaction. This KPI is measured by periodic survey and it is a qualitative KPI.
Cost management is another quantitative KPI. It can be measured by comparing between the actual costs and the contractual costs.
OTIF (one-time in-full) deliveries is a quantitative KPI. It can be measured by counting the inaccurate deliveries in the period or inaccurate deliveries as a percentage of total number of deliveries for period.
Reference: CIPS study guide page 117-122
LO 2, AC 2.2
NEW QUESTION # 30
Which of the following would be useful tools to incentivise supplier innovation over the duration of the contract?
1. Gainshare arrangement
2. Liquidated damages
3. Service credits
4. Fixed bonus payments
- A. 2 and 4 only
- B. 1 and 4 only
- C. 1 and 3 only
- D. 3 and 4 only
Answer: B
Explanation:
Gainshare is an incentive for cost control
Liquidated damage is common type of disincentive for late completion
Service credit is a remedy for not achieving targets set out in an SLA
Fixed bonus payment is an incentive for early completion
Reference:
LO 3, AC 3.3
NEW QUESTION # 31
Company A sends a purchase order complete with a set of conditions of contract for the provision of professional services to Company B. Company B responds with an invoice complete with a set of its own conditions of contract. Company A pays the invoice. Whichconditions of contract take legal precedence?
- A. Company A's
- B. Neither Company A's nor Company B's
- C. Both Company A's and Company B's
- D. Company B's
Answer: D
Explanation:
This scenario illustrates the "battle of the forms," where each party attempts to impose its own terms. The general legal principle is that the last set of terms sent before performance (in this case, Company B's invoice) takes precedence if the other party proceeds without objection (Company A's payment). Therefore, Company B's terms would likely govern the contract.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 1, Section 1.2.3 - Principles relating to the battle of the forms and precedence of contract terms.
NEW QUESTION # 32
An example of a qualitative performance measure could be one that relates to opinions about the service quality of the supplier. Is this correct?
- A. Yes, this is often how satisfaction is measured
- B. Yes, this will relate to the actual number of complaints received
- C. No, this will relate to how much prices have increased by
- D. No, this type of measure will relate to the number of incomplete deliveries
Answer: A
Explanation:
Qualitative performance measures capture subjective or non-numerical aspects of service, such as customer satisfaction, perceptions, and opinions. These are often gathered through surveys or interviews. While quantitative data is crucial, qualitative insights can reveal hidden issues and improve relationship management.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.3.2 - Qualitative and quantitative performance measures.
NEW QUESTION # 33
In order to monitor supplier's performance, an organization decides to draft performance management frameworks. Which of the following are the components of a performance management framework? Select THREE that apply:
- A. KPIs
- B. Force majeure
- C. Justification
- D. Targets
- E. Consequences
- F. Indemnity
Answer: A,D,E
Explanation:
There are three key components of a performance management framework:
- Key performance indicators (KPIs) - What you are measuring
- Targets - the performance level to be achieved
- Consequences - what happens if the measures are not achieved and/or if they are exceeded Reference: CIPS study guide page 11-14 LO 1, AC 1.1
NEW QUESTION # 34
Bandpro is a reseller of branded computer products to the private and public sector. The procurement team must purchase 500 items each day solely by multiple phone calls and emails to suppliers. Due to this practice, it takes a lot of time to track and collect relevant documents.Some important documents even get lost, which makes procurement audit more burdensome. Which of the following would increase the robustness of audit trails in procurement activities?
- A. Every evidence must be recorded by paper
- B. Adopt e-procurement
- C. Spend less time on auditing procurement procedures
- D. Rectify non-compliant activities
Answer: B
Explanation:
Audit trail is a chronological record the sequence of events connected to a given transaction, such as a purchase of raw materials, payroll disbursements, or a detailed financial statement. The record includes all the source documents connected to the transaction, providing context and clarity in the event a review is required.
The more comprehensive the documentation, the more effective the audit trail is when used to create financial reports, verify information, and ensure compliance while eliminating fraud.
In the scenario, the procurement team gets the quotation from phone calls and emails which have weak audit trails and lack of transparency. One solution may be increasing the use of e-procurement system.
Reference:
- What is an audit trail?
- CIPS study guide page 6-7
LO 1, AC 1.1
NEW QUESTION # 35
Which of the following clauses addresses fraud, bribery and corruption?
The Company has undertaken commercially reasonable efforts to eliminate Conflict Minerals from each Company Product and any products currently proposed to be manufactured by the Company or on its behalf in the future. "Conflict Minerals" means columbite-tantalite (coltan),cassiterite, gold, wolframite, or their derivatives, which originate in the Democratic Republic of the Congo or other country the exploitation and trade of which is determined by the United States to be financing conflict in the Democratic Republic of the Congo or other country.
- A. Nothing in this Agreement shall prevent a Party from utilizing the services of any subcontractor as it deems appropriate to perform its obligations under this Agreement; provided, however, that each Party shall require its subcontractors to comply with all applicable terms and conditions of this
- B. Each Party hereby undertakes that, at the date of the entering into force of the Contract, itself, its directors, officers or employees have not offered, promised, given, authorized, solicited or accepted any undue pecuniary or other advantage of any kind in any way connected with the Contract and that it has taken reasonable measures to prevent subcontractors, agents or any other third parties, subject to its control or determining influence, from doing so.
- C. Agreement in providing such services and each Party shall remain primarily liable to the other Party for the performance of such subcontractor.
- D. Customer will be responsible for and shall ensure that while Service Provider employees, agents or contractors are on Customer's premises, all proper and legal health and safety precautions are in place and fully operational to protect such persons.
Answer: B
Explanation:
This question is intended to let students know about how contractual clauses regarding ethical issues is constructed. The exam paper may not ask about this.
"Each Party hereby undertakes that, at the date of the entering into force of the Contract, itself, its directors, officers or employees have not offered, promised, given, authorized, solicited or accepted any undue pecuniary or other advantage of any kind in any way connected with the Contract and that it has taken reasonable measures to prevent subcontractors, agents or any other third parties, subject to its control or determining influence, from doing so.": This is a clause addressing fraud, bribery and corruption. It is created to prevent any undue act by contracting parties. You may find other anti-corruption clause samples in this document.
"Nothing in this Agreement shall prevent a Party from utilizing the services of any subcontractor as it deems appropriate to perform its obligations under this Agreement; provided, however, that each Party shall require its subcontractors to comply with all applicable terms and conditions of this Agreement in providing such services and each Party shall remain primarily liable to the other Party for the performance of such subcontractor.": This clause is used to control the subcontracting and subcontractors.
"Customer will be responsible for and shall ensure that while Service Provider employees, agents or contractors are on Customer's premises, all proper and legal health and safety precautions arein place and fully operational to protect such persons.": This clause is used to ensure health and safety standards.
"The Company has undertaken commercially reasonable efforts to eliminate Conflict Minerals from each Company Product and any products currently proposed to be manufactured by the Company or on its behalf in the future. "Conflict Minerals" means columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives, which originate in the Democratic Republic of the Congo or other country the exploitation and trade of which is determined by the United States to be financing conflict in the Democratic Republic of the Congo or other country.": This is a clause addressing conflict minerals.
Reference: CIPS study guide page 164-166
LO 3, AC 3.2
NEW QUESTION # 36
As a result of a global pandemic, a local hospital is facing significant patient capacity pressures and would like the construction of a new 50-bed ward to be prioritised and fully operational at the earliest opportunity.
Which of the following pricing arrangements would support this aspiration?
- A. Fixed price economic adjustment pricing
- B. Incentivised contract pricing
- C. Penetration contract pricing
- D. Time and materials arrangement pricing
Answer: B
Explanation:
Incentivised pricing is designed to motivate suppliers to meet or exceed performance targets by providing financial or other incentives. In urgent projects, such as constructing a hospital ward during a pandemic, incentivised pricing encourages suppliers to accelerate delivery without compromising on quality. This supports the buyer's need for speed and reliability.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.2.2 - Types of pricing mechanisms and when to use them.
NEW QUESTION # 37
Since services are intangible, so KPIs for services must be qualitative in all circumstances. Is this statement correct?
- A. No, KPIs for services must always be quantitative so that they can be measured easily
- B. Yes, the only measure mattered to supply of services is end-users' satisfaction
- C. Yes, quantitative KPIs are limited to timeliness of supply of goods, defective rates and in-full quantities, which are applied to monitor supplier of physical goods
- D. No, some KPIs for services are measurable by means of outcome, time and space performed
Answer: D
Explanation:
KPIs are used to monitor supplier's performance. They can be qualitative or quantitative. Of course, service providers can be monitored by quantitative KPIs regarding the outcome achieved (such as uptime in IT contracts), timeliness of deliveries (such as in construction contracts)...
Reference:
LO 2, AC 2.2
NEW QUESTION # 38
Maximum Score: 1
Which of the following are recognised procurement risks when entering into a fixed price contract with a supplier? Select TWO that apply.
- A. The supplier will sue if he makes a loss
- B. If costs rise the supplier may default on the contract
- C. The supplier can claim for unforeseen additional costs
- D. The supplier can make excess profits if costs fall
- E. Contract prices can rise in line with national inflation
Answer: B,D
Explanation:
In a fixed price contract:
* The price is agreed and stays fixed, regardless of changes in actual costs (unless a separate adjustment clause exists).
Key risks:
* If costs rise significantly (materials, labour, etc.), the supplier's profit is squeezed or wiped out and the supplier may default or fail to perform # (A) is a recognised risk.
* If costs fall, the supplier's actual cost base drops but the selling price is fixed, allowing the supplier to make excess or windfall profits # (D) is another recognised risk.
The other options:
* (B) Under a pure fixed price arrangement, the supplier is normally not entitled to claim for unforeseen additional costs unless expressly provided for.
* (C) An inflation-linked price is not truly "fixed"; that's a variable/indexed price mechanism.
* (E) A supplier may attempt legal action in some circumstances but "will sue if he makes a loss" is not a standard, defined procurement risk in fixed price contracts.
Reference: CIPS L4M3 Commercial Contracting - Pricing mechanisms: fixed price contracts and their risk allocation.
NEW QUESTION # 39
A procurement manager is setting KPIs measurement for user satisfaction. He also wants to encourage users to share the reason why they feel the way they do. Which of the following types of KPI should the procurement manager apply?
- A. Numerical measure
- B. Binary measure
- C. Quantitative measure
- D. Qualitative assessment
Answer: D
Explanation:
There are 3 types of KPI measure:
- Binary KPIs
- Quantitative KPIs (or numerical)
- Qualitative KPIs
User satisfaction is subjective, therefore, using qualitative assessment is the best answer.
Reference:
LO 2, AC 2.2
NEW QUESTION # 40
Maximum Score 1
Drafting a specification is important because these documents become embedded within the contract and therefore, are legally binding. Is this statement true?
- A. Yes, care needs to be taken because the specification should be part of the contract
- B. No, as the specification is separate to the contract and has no legal standing
- C. Yes, because all specifications must be approved by the organisation's board according to legislation
- D. No, because legally binding contracts only contain terms and conditions
Answer: A
Explanation:
Specifications are normally attached as schedules and form part of the contract; they define deliverables and performance standards.
Therefore, once signed, they become legally binding - errors or ambiguity can create disputes.
Reference: CIPS L4M3 Commercial Contracting - "Specifications and schedules as binding documents."
NEW QUESTION # 41
The model form contract invented by Institute of Civil Engineers is...?
- A. JCT
- B. NEC
- C. IMechE/IET
- D. FIDIC
Answer: B
Explanation:
NEC - New Engineering Contracts is a family of contracts invented by Institute of Civil Engineers. The contracts are suitable for procuring a diverse range of works, services and supply, ranging from major framework projects through to minor works and the purchase of supplies and goods.
FIDIC is a French language acronym for Federation Internationale Des Ingenieurs-Conseils, which means the international federation of consulting engineers. It was started in 1913 by the trio of France, Belgium and Switzerland. The United Kingdom joined the Federation in 1949. FIDIC is headquartered in Switzerland and now boasts of membership from over 60 different countries. FIDIC published its first contract, titled The Form of contract for works of Civil Engineering construction, in 1957. As the title indicated, this first contract was aimed at the Civil Engineering sector and it soon became known for the colour of its cover, and thus, The Red Book. It has become the tradition that FIDIC contracts are known in popular parlance by the colour of their cover. This first contract by FIDIC was undertaken jointly with the International federation of Building and Public works. FIDIC's concerted effort at achieving broad consultation and acceptance of its contract forms has seen subsequent editions of its contracts being ratified by the International Federation of Asian and Western Pacific Contractors Association, Associated General Contractors of America and the Inter-American Federation of the Construction Industry, Multilateral Development Banks among others. Because of the broad support it enjoys, FIDIC contracts are the foremost contracts in international construction.
The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction, guidance notes and other standard documentation for use in the construction industry in the United Kingdom. From its establishment in 1931, JCT has expanded the number of contributing organisations.
IMechE/IET: Institution of Mechanical Engineers/Institution of Engineering and Technology - two separate institutes that issue jointly agreed model forms covering the design, supply and installation of electrical, electronic and mechanical plant including special conditions for the ancillary development of software.
Reference:
LO 3, AC 3.1
NEW QUESTION # 42
Curnoe Ltd supplied tyres to Garage Ltd. Garage Ltd agreed in the contract that for any specified breaches of contract, it would pay Curnoe Ltd £5 per tyre sold in breach. It subsequently sold tyres at below the listed price, which was one of the breaches mentioned in the contract. What is the £5 per tyre provision an example of?
- A. Liquidated damages
- B. Quantum meruit
- C. Exclusion clause
- D. Unliquidated damages
Answer: A
Explanation:
Liquidated damages are a pre-agreed amount stated in the contract, payable upon a specific breach. These clauses are enforceable if the amount is a genuine pre-estimate of loss and not punitive. In this case, the £5 per tyre is a typical liquidated damages clause as it quantifies the penalty for non-compliance.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 3, Section 3.2.1 - Liquidated damages, indemnities, and breach clauses.
NEW QUESTION # 43
Royal Naval Hospital at Rockstown, Anyport manages a fleet of nine ambulance vehicles. During busy periods, it becomes very difficult to keep track of the location of each ambulance (and the nature of their journey). Continual problems lead to the proposal for a new control system (ERNS).
For this ERNS project, the procurement department has drafted a specification in which only a bullet point list of basic requirements was written down. The procurement manager understands that the specification should be developed more specifically but a cross functional team from the Hospital could not do that. A senior buyer suggests that some of Hospital's pre-qualified suppliers could support them in developing the specification.
Which of the following should be a priority approach of procurement department in developing dialogue with those suppliers about specification development?
- A. One-to-one meeting with the suppliers
- B. Internal discussion
- C. General networking
- D. Request for quotation from the suppliers
Answer: A
Explanation:
The procurement team has drafted basic requirements in the specification. They will need to develop it further and more specific. Developing market dialogue with supplier is a good solution. There are number of approaches which can be taken to engage with suppliers:
- General meetings: buyer meets supplier at a networking event (such as trade show) or social media. These discussions are unlikely to deliver very specific information.
- One-to-one meetings: This will be most likely to deliver direct input into specification development and supplier-specific product development information.
- Group visits
- Meet-the-buyer events
- Formal negotiations or competitive
The answer for this QUESTION should be One-to-one meeting.
Reference:
LO 2, AC 2.1
NEW QUESTION # 44
Which of the following would be considered as advantages of an industry model form contract?
It provides greater flexibility for negotiation
It reduces the cost of contract development
It is usually designed to be fair to both parties
It removes the need for the buyer to understand it
- A. 1 and 2 only
- B. 2 and 4 only
- C. 2 and 3 only
- D. 1 and 3 only
Answer: C
Explanation:
Industry model contracts are pre-written templates that include widely accepted terms. They save time and legal costs during contract development and are generally written to be neutral or fair toboth parties. They do not remove the need for buyers to understand the terms and are not necessarily highly flexible.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 3, Section 3.1.3 - Use of industry standard form contracts.
NEW QUESTION # 45
Which of the following is the best definition of "ultra vires"?
- A. Let the buyer beware
- B. From one party
- C. Beyond powers
- D. In good faith
Answer: C
Explanation:
Ultra vires is a Latin phrase, meaning "beyond the powers." Describes actions taken by government bodies or corporations that exceed the scope of power given to them by laws or corporate charters. When referring to the acts of government bodies (e.g., legislatures), a constitution is most often the measuring stick of the proper scope of power.
Reference:
LO 1, AC 1.2
NEW QUESTION # 46
Which of the following are good examples of a Key Performance Indicator?
The total number of services provided
Reduction rate in goods or services
Complaints resolved within two days
Delivery of goods on time and in full
- A. 2 and 3 only
- B. 1 and 2 only
- C. 3 and 4 only
- D. 2 and 4 only
Answer: C
Explanation:
Effective KPIs should be measurable, relevant, and tied to performance. "Complaints resolved within two days" and "Delivery of goods on time and in full" are standard KPIs as they reflect quality and timeliness of service-both key to contract success. The "total number of services" and general reductions do not directly reflect performance outcomes.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.3.1 - Key performance indicators and their application.
NEW QUESTION # 47
Which of the following are most likely to be substantive elements of the specification of a truck? Select TWO that apply:
- A. Expected lifespan
- B. Ethics
- C. Abbreviation
- D. Guarantee
- E. Foreword
Answer: A,D
Explanation:
The key substantive elements to be included in a specification are:
- Characteristics of the product or service
- Time scale for delivery
- Response times for defects
- KPIs relating to performance and reliability
- Lifespan and durability expectations
- Documentary requirement for training/user manual and/or management information
- Any specific requirements regarding implementation
Reference: CIPS study guide page 90-92
LO 2, AC 2.1
NEW QUESTION # 48
Which of the following are reasons why a purchaser wants to embed a subcontracting clause into the main contract? Select TWO that apply:
- A. To condemn whole liabilities to subcontractors
- B. To keep main contractor liable
- C. To reduce the main contract complexity
- D. To improve supply chain transparency
- E. To induce the conflicts between the main contractor and subcontractors
Answer: B,D
Explanation:
There are number of reasons why the purchaser will want to control the supplier's subcontracting:
- Supply chain transparency: Normally the purchaser has invested a lot of effort into selecting the right contractor. However, the main contractor's selection of subcontractor might not be in such careful manner, which may result in poor performance. Purchaser must know who subcontractors are. Controlling the subcontracting process can help the purchaser control the outcome.
- Contract terms: the purchaser's requirements must be reflected in the subcontracts. The subcontracting clauses may require the main contractor to do this.
- Liability: the main contractor may subcontract the whole or a part of its liabilities. Subcontracting clause may bind the contractor to be liable with the work, it cannot just blame the subcontractor for any faults.
Reference:
LO 3, AC 3.2
NEW QUESTION # 49
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