Discuss CIPS L4M3 Exam Topic 1 Question 78

What are disadvantages of a buyer contracting on the supplier's terms? Select TWO that apply.

AMaterials will not be changed without the buyer's consent

BThe buyer would not be subject to any indemnity clause obligations

CTitle to goods may remain with the supplier until payment is received

DGoods received late will incur penalties for the supplier

EPrices may increase without notification to the buyer

Suggested Answer: A, C, D, E

Contracting on the supplier's terms can pose risks for the buyer. Common disadvantages include retention of title clauses (C), where the supplier retains ownership of goods until full payment is made. Also, suppliers may include clauses allowing them to raise prices without notification (E). These terms shift risk to the buyer and reduce predictability and control.

CIPS L4M3 Commercial Contracting Study Guide, Chapter 3, Section 3.1.3 -- Standard forms of contract and negotiating key terms.

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12 comments · newest first

Kristel 3 days ago

Wait, are you saying the supplier keeps title until paid? That's wild!

Alex 8 days ago

I agree, especially with E. That's a big risk!

Patria 13 days ago

C and E are definitely issues.

Gail 18 days ago

I thought indemnity clauses were standard, what's up with B?

Phillip 24 days ago

D seems unfair, penalties should be on the buyer too.

Gayla 29 days ago

Wow, I didn't realize title could stay with the supplier!

Desmond 1 month ago

I disagree, A is more of a protection for the buyer.

Tuyet 1 month ago

C and E are definitely disadvantages.

Von 1 month ago

I think goods received late incurring penalties for the supplier might not be a disadvantage for the buyer, but I'm a bit confused about that.

Frederic 2 months ago

I remember something about indemnity clauses, but I can't recall if they apply here. I need to double-check that part.

Heidy 2 months ago

I'm not entirely sure, but I feel like prices may increase without notification to the buyer could be a disadvantage too. We discussed something similar in class.

Yasuko 2 months ago

I think one disadvantage could be that title to goods may remain with the supplier until payment is received. That sounds familiar from our last practice session.

CIPS L4M3 Exam - Topic 1 Question 78 Discussion