CIPS L5M3 Exam - Topic 3 Question 50 Discussion

Actual exam question for CIPS's L5M3 exam

Question #: 50
Topic #: 3

[All L5M3 Questions]

Verity Fashion is a clothing manufacturer and has an order to create 10,000 pairs of flipflops for a retailer for the summer. The order was placed over the phone in February. The order has been completed and has been boxed up ready for delivery. The retailer calls Verity Fashion in June and says that the order is no longer required. What action can Verity Fashion take?

Asue for damages as the flip flops have already been made and this incurred costs

Bnothing- there is no written contract in place

Csubcontract the manufacturing of the flipflops to a third party

Dclaim on insurance

Show Suggested Answer

Suggested Answer: A

Verity can sue for damages. The order was placed over the phone meaning that there was a verbal contract in place. Contracts do not need to be written to be enforceable so option 2 is incorrect. There is no termination clause mentioned in the question so you can assume that there isn't one. This means that the retailer is committing a breach of the verbal contract by cancelling the order. Verity could therefore apply for damages. (Whether or not they'd be awarded is a different matter!). This question tests your understanding of when contracts can be terminated and remedies for breaches. See p. 134.

by Luz at Apr 09, 2025, 02:30 PM

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Frank

2 months ago

Wow, I didn't know verbal orders could be so risky!

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Cyndy

2 months ago

Nothing they can do without a contract, it's a bummer.

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Lucy

2 months ago

I think subcontracting could be a smart move.

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Earnestine

3 months ago

But there's no written contract, right? So can they even do that?

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Pedro

3 months ago

They should definitely sue for damages! That's a lot of flip flops.

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Ryann

3 months ago

Claiming on insurance seems like a long shot, but if they have coverage for lost orders, maybe option D could be valid? I'm not confident about that one.

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Tricia

3 months ago

I practiced a similar question where a retailer canceled an order, and I think subcontracting could be a way to mitigate losses, so option C could work too.

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Dawne

4 months ago

I think they might be able to sue for damages, but I'm not entirely sure if that applies without a formal contract. Option A sounds plausible.

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Frederic

4 months ago

I remember discussing how verbal agreements can be tricky, so I'm leaning towards option B since there's no written contract.

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Alberta

4 months ago

This seems straightforward to me. Since the order was placed over the phone, there's likely no written contract, so option B is the correct answer.

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Brandon

4 months ago

I think option A is the way to go here. The company has already incurred the costs of manufacturing the flip-flops, so they should be able to sue for damages since the order was canceled.

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Viva

4 months ago

I'm a bit confused on this one. Is there any information about a written contract? That could make a difference in the options available.

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Pilar

5 months ago

Okay, let's see. The key facts seem to be that the order was placed over the phone and the flip-flops have already been manufactured. I'm leaning towards option A, but I'll double-check the details.

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Audry

5 months ago

Hmm, this seems like a tricky one. I'll need to carefully consider the details about the order and the contract to determine the best course of action.

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