CIPS L4M3 Exam - Topic 7 Question 39 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 39
Topic #: 7

Southwark is negotiating a contract with Orchard to provide software and IT services. Orchard will manufacture and install the products which are contractually supplied by IBM. Southwark's procurement manager is worried that during the contract there would be some problems that they would not able to claim for damages from Orchard. Which of the following should be included in the head contract so that Southward can sue IBM, should the need arise?

ANegligence

BIndemnity

CCollateral warranty deed

DInsurance

Show Suggested Answer

Suggested Answer: A

Advantages of using fixed pricing arrangement are as below:

- Budget/income certainty - prices are fixed up front and should not change

- The impact of changes to the supplier's cost base is not fed through to the purchaser. If costs diminish, the supplier will benefit from this, and if costs rise, the purchaser will benefit

LO 3, AC 3.3

by Nicolette at Jul 10, 2024, 05:10 PM

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Tresa

6 months ago

Insurance is important, but not for suing IBM directly.

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Joni

6 months ago

Negligence won't cover it, they need something stronger.

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Percy

6 months ago

Wait, can they really sue IBM like that? Seems tricky.

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Youlanda

7 months ago

I think indemnity is the way to go here.

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Wai

7 months ago

Definitely need a collateral warranty deed for that!

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Marsha

7 months ago

I'm leaning towards insurance as a safety net, but I wonder if it really helps in this specific situation with IBM.

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Audry

7 months ago

I feel like negligence could be relevant, but it seems more about proving fault rather than ensuring a claim can be made.

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Elsa

7 months ago

I think collateral warranty deeds might be the right choice since they can provide a direct claim against IBM, but I need to double-check that.

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Alyce

8 months ago

I remember discussing indemnity clauses in class, but I'm not entirely sure if that's the best option here.

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Mari

8 months ago

Okay, I think I've got it. Southwark needs to include an indemnity clause in the contract with Orchard, so they can hold IBM responsible if there are any issues. That seems like the best option.

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Hailey

8 months ago

Hmm, I'm a bit confused. Is the issue that Southwark can't sue Orchard, or that they want to be able to sue IBM? I need to re-read the question carefully.

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Francine

8 months ago

This is a tricky one. I think the key is to focus on the contract terms that would allow Southwark to sue IBM directly if needed.

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Nadine

8 months ago

Indemnity, got it. That makes sense - Southwark wants to make sure they're covered no matter what happens with the Orchard contract. I feel pretty confident about this one.

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Laquanda

8 months ago

This looks like a pretty straightforward task, just need to follow the steps carefully.

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Tiera

1 year ago

Indemnity? More like 'in-dementia', amirite? These exam questions are really testing our sanity.

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Wayne

11 months ago

C) Collateral warranty deed

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Jaime

12 months ago

B) Indemnity

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Reita

1 year ago

A) Negligence

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Candra

1 year ago

Negligence? What is this, a game of find the odd one out? Indemnity is the clear winner here, unless Southwark wants to roll the dice and hope for the best.

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