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NEW QUESTION 25
MWB operates serviced offices in central London. Rock entered a contractual licence with MWB to occupy office space in Marble Arch and had accumulated licence fees in arrears. The original licence agreement contained a 'No Oral Modification' clause that said: 'All variations to this licence must be agreed, set out in writing and signed on behalf of both parties before they take effect'.
After 6 months, Rock director re-negotiated to extend payment period over phone call and MWB credit controller agreed his proposal. Is this agreement considered as an effective variation to the original licence agreement?

• A. Yes, because the credit controller had agreed with Rock director's proposal
• B. No, because the mechanism for variation has been set out in the original contract
• C. Modification' clause, must have intended to dispense with the clause
• D. No, because Rock director assumed that the variation was effective and convinced credit controller to believe it
• E. Yes, because parties who agree to altering the original contract orally despite a 'No Oral.

Answer: B

Explanation:
The license can be amended during its lifespan. However, in this case, it already has a clause allowing for mechanism of variation which sets out who can authorise changes and prohibits any oral variation. Therefore, the agreement between Rock's director and MWB credit controller is not an effective variation to the license.
Reference:
LO 1, AC 1.1

NEW QUESTION 26
Standard terms and conditions should become the governing terms for which group of items?

• A. Bottleneck items
• B. Leverage items
• C. Routine items
• D. Strategic items

Answer: C

Explanation:
Standard terms and conditions are set of terms that is prepared by an organisation. These terms can become the governing terms in low-value, low-risk transactions (or Routine items according to Kraljic's portfolio model). They can be a reference when negotiating for more important contract.
Reference:
LO 3, AC 3.1

NEW QUESTION 27
Under a price adjustment agreement, which of the following would be supplier's justification for increasing unit price?

• A. Rise in shares price
• B. Rise in customer's satisfaction
• C. Rise in fuel price
• D. Rise in economies of scale

Answer: C

Explanation:
Normally in a price adjustment agreement, the supplier is allowed to change price based on an indexation, which is published by a third party (for example, government or exchange market). The selected indices often associate with input materials of supplier. For instance, the plastics manufacturer may adjust their price based on crude oil price as oil is major input of producing plastics. Other suppliers may select different set of indices, such as Producer Perception Index.
In this question, only 'Rise in fuel price' could be a justification for supplier to increase price because:
- It may affect the input material price
- The index is checked and published by an independent third party.
Reference:
LO 3, AC 3.3

NEW QUESTION 28
Which of the following are implied terms in sales contracts? Select THREE that apply.

• A. Fitness for purpose
• B. Risk transfer
• C. Mode of transportation
• D. Payment method
• E. Customer satisfaction
• F. Transfer of ownership

Answer: A,B,F

Explanation:
Generally, under the Sale of Goods Acts (in UK, Singapore, Australia,...) or Commercial Codes (in France, Germany, Vietnam,...), the sale contracts have the following implied terms:
- the seller has the right to sell the goods. This is also a condition of the contract
- the goods are free from undisclosed security interests
- the goods supplied under the contract will be reasonably fit for any purpose which the buyer made known to the seller
- sales of unseen goods will be of merchantable quality, and match their description and conform with a sample.
- Passing of risk
- Passing of possession and title
...
Reference:
LO 3, AC 3.1

NEW QUESTION 29
......

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