CIPS Exam L4M3 Topic 7 Question 39 Discussion

Actual exam question for CIPS's L4M3 exam

Question #: 39
Topic #: 7

[All L4M3 Questions]

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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17 days ago

I think we should include indemnity in the head contract.

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