CIPS L4M3 Exam - Topic 5 Question 32 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 32
Topic #: 5

[All L4M3 Questions]

Cleveland Insurance (Cleveland) offers a range of insurance services. The main software used in the call centre is a customer relationship management (CRM) system. Cleveland perceived an urgent need to replace the existing CRM system to deal with the increasing number of customers and services.

Urgent Digital Ltd (Digital) is one of the bidders of Cleveland's ITT for designing, building and managing the new CRM system. Its bid team is led by Hank Irvine, its technical director. Hank realises that winning the Cleveland contract (valued at approximately 50M) will enhance his career. During discussions with Cleveland, Hank offers certain assurances regarding timescales for the project. He has not carried out any investigations into the viability of the timescales. Hank has little idea whether the timescales can be met.

Cleveland decides that Digital's bid meets with its requirements, especially given the assurances in timescale offered by Hank, and decides to proceed with it, subject to a formal contract. Eventually, a formal contract is signed by both parties. The initial assurances given by Hank about the timing of the project are never going to be achieved and are at best grossly exaggerated.

Cleveland brought the case to the court and sought rescission of contract with Digital. Is Cleveland's claim appropriate in this case?

AYes, because Cleveland needs to seek rescission first before claiming for damages

BYes, because both parties agreed with rescission of their contract

CNo, because the work had been carried out which could not be returned

DNo, because the contract does not include any provision on rescission

Show Suggested Answer

Suggested Answer: A

When a party takes on a contractual obligation, they are legally required to perform the obligation.

That same contracting party is still entitled to subcontract out the work to another service provider, unless the contract:

- is a contract for personal services, such an employment contract

- contains an express term preventing subcontracting out the work, or an implied term

Subcontracting clauses are written to control whether the contractor is entitled to subcontract, and how purchaser shall control that subcontracting process.

- Subcontracting clauses (delegation of contractual obligations to third parties)

- CIPS study guide page 153-157

LO 3, AC 3.2

by Beth at Apr 20, 2024, 09:52 PM

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Albert

3 months ago

Actually, I think the contract's terms matter a lot in this situation.

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Rebbecca

3 months ago

No way they can just walk away without consequences.

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Weldon

3 months ago

Wait, how can they prove the assurances were exaggerated?

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Kanisha

4 months ago

I agree, they need to protect their interests!

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Luisa

4 months ago

Cleveland definitely has a case for rescission here.

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Salina

4 months ago

I think option A could be correct since rescission might be necessary before seeking damages. But I’m not clear on whether they can just rescind without a specific clause in the contract.

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Brigette

4 months ago

I feel like option C makes sense because if work was done, it complicates things. But then again, if the assurances were misleading, does that change the situation?

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Vince

4 months ago

I’m not entirely sure, but I think rescission could be appropriate if Cleveland relied on Hank's assurances. It seems like a similar case we studied where false statements led to contract disputes.

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Eun

5 months ago

I remember we discussed the importance of misrepresentation in contract law. If Hank exaggerated the timescales, that might give Cleveland grounds for rescission, right?

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Francis

5 months ago

I'm a bit confused on the difference between rescission and damages. I'll need to make sure I understand the legal implications of each before deciding which option is more appropriate here.

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Mozell

5 months ago

Okay, the key seems to be whether Hank's assurances about the timescale were fraudulent or just exaggerated. If they were fraudulent, then rescission may be the right approach. But if they were just exaggerated, that might not be enough.

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Lasandra

5 months ago

Hmm, the question is asking about the appropriateness of Cleveland's claim for rescission. I'll need to think through the legal principles around rescission and whether the facts support that remedy.

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Toshia

5 months ago

This seems like a tricky one. I'll need to carefully review the details about the contract and the assurances made by Hank to determine if rescission is appropriate.

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Chantell

5 months ago

Hmm, I'm a bit confused by the question. I'm not sure if I fully understand the differences between the CloudFront policies and the Lambda@Edge function. I'll need to review those concepts again.

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Ashleigh

5 months ago

Okay, let me think this through. Since the home page is worth 10 cents per view and the article pages are worth 5 cents per view, we need a metric that can capture those different values. I'm leaning towards Custom Scoring as the best option.

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Justine

5 months ago

I'm still a bit confused on the difference between the options. Is there a specific reason why a global synonym wouldn't work here, or why we wouldn't want to use the SYS schema? I want to make sure I fully understand the implications of each approach.

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Lenora

10 months ago

I agree with the first candidate. If the assurances were false, then Cleveland should be able to rescind the contract. Can't blame them for wanting to get out of this deal.

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