Pass the CIPS CIPS Level 4 Diploma in Procurement and Supply L4M3 Questions and answers with CertsForce

A guarantee is an agreement given by a trader to a consumer, without any extra charge, to repair, replace or refund goods that do not meet the specifications set out in the guarantee. A guarantee is usually issued by the manufacturer of goods or by a trader that provides goods as part of a service - replacement windows, for instance. Generally, a guarantee provider undertakes to carry out free repairs, for a set period of time, for problems that can be attributed to manufacturing defects.

To meet labour standards, the most appropriate requirement is ethical trading certification (A) – ensuring fair wages, safe conditions, and compliance with global labour rights.

The other options relate mainly to environmental, not labour, outcomes.

FIDIC is the International Federation of Consulting Engineers (or Fédération Internationale des Ingénieurs Conseils in French). FIDIC has produced many publications, including the model form contracts, best practice guidances, research on sustainability, integrity and risk management. FIDIC model form contracts have been developed by this organisation since 1999, now they consist of several different books which are marked by colours. Thus, FIDIC model contracts also have the nickname "Rainbow suite of contracts". Basically, the "Rainbow Suite" include the following books:

* Yellow book: Plant and Design-Build Contract (2 editions: 1999 and 2017)

* Silver book: EPC/Turnkey Contract (2 editions: 1999 and 2017)

* Red book: Construction Contracts (2 editions: 1999 and 2017)

* Emerald book: Conditions of Contract for Underground Works (1st Ed 2019)

* Blue-Green book: Dredgers Contract (2 editions: 2006 and 2016)

* Gold book: Design, Build and Operate Contract Guide

* Pink book: Construction Contract Multilateral Development Bank Harmonised Ed (2 editions: 2005 and 2010)

This type of model contract is commonly used around the world because its author, International Federation of Consulting Engineers, collaborates closely with development banks such as World Bank, Africa Development Bank, Asia Development Bank, etc. Every construction project that is financed by these institutions must adopt the FIDIC contracts.

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 constructionindustry in the United Kingdom. From its establishment in 1931, JCT has expanded the number of contributing organisations.

ITC (International Trade Centre) produces contracts specifically designed for small companies doing international business, covering the sale of goods, distribution, services and joint ventures. Many small companies are now engaged in international trade, but don’t have access to the necessary contract forms to protect themselves. ITC and leading legal experts developed eight generic contract templates that incorporate internationally recognized standards and laws for most small business situations.

CIPS has several model forms of contract designed specifically for IT buying and servicing.

Industry model form contracts (e.g. NEC, JCT, FIDIC):

Reduce the cost of contract development (2) – less drafting from scratch.

Are often developed by industry bodies and so are intended to be balanced and fair (3).

They do not remove the need for the buyer to understand them (4 – definitely not an advantage), and while some negotiation is possible, they don’t necessarily provide “greater flexibility” (1) than a bespoke contract; they standardise rather than expand flexibility.

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.

A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. Some characteristics of Leases are:

- The right to use the lessor’s asset is granted in exchange for a fee called the lease payment.

- The lease payments are usually paid in installments.

- Leases may be long- or short-term.

- At its inception a lease agreement constitutes a mutually unperformed contract

Though the ownership of the asset is not transferred to the lessee, some responsibilities and risks do. The lessor and lessee may negotiate on who is responsible on maintenance, insurance, etc.

An ITT specifies what the buyer requires — including delivery milestones, scope, and evaluation criteria.

Supplier rates and BAFOs are part of supplier responses, not ITT content.

Advantages for the use of model forms of contract include:

• Helps to reduce the time and cost in contract development, particularly in detailed negotiation of terms and conditions.

• Avoids starting from the beginning each time, avoids” re-inventing the wheel” each time.

• Model contract forms may be widely accepted by both buyers and sellers across the industry or sector.

• Model contract forms are even handed and designed to be fair to both parties in the contract.

• Model contract forms include standard clauses that can be selected or deleted on an as required basis.

• Model contract form’s standard clauses are more likely to contain the correct legal terminology without recourse to third party experts.

Disadvantages of this type of contract include:

• Terms may be less advantageous, than may be achieved through negotiations, particularly where there is one party who is much stronger than the other.

• The generic contract may be difficult to adapt to the specific circumstances between two parties.

• Terms may not necessarily include special clauses or requirements to cover a particular or unusual situation.

• Legal advice and input may still be required, particularly where significant variations to the norm are required.

• There may be costs associated with training staff in the detailed application of the model forms of contract.

The battle of the forms occurs when:

Both buyer and supplier exchange documents (RFQ, PO, acknowledgements) containing their own standard terms and conditions,

Each party is trying to ensure their own terms govern the contract.

It is literally a battle to secure their own terms and conditions (A).

Model form contracts streamline procurement processes by providing pre-agreed and widely understood terms, which reduce the time and legal costs of contract drafting. These are especially useful in complex industries and promote consistency and fairness.