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CIPS L5M3 Exam - Topic 2 Question 62 Discussion

Tutu Incorporated has a contract with a software company to provide their IT software. They want to ensure that the supplier pays compensation if there are any issues with service (e.g. the software doesn't work for a day). Which two items would Tutu Incorporated need to include in the contract?
C) service level agreement and D) service credit
A) unliquidated damages
B) letter of credit
E) insurance

CIPS L5M3 Exam - Topic 2 Question 62 Discussion

Actual exam question for CIPS's L5M3 exam
Question #: 62
Topic #: 2
[All L5M3 Questions]

Tutu Incorporated has a contract with a software company to provide their IT software. They want to ensure that the supplier pays compensation if there are any issues with service (e.g. the software doesn't work for a day). Which two items would Tutu Incorporated need to include in the contract?

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Suggested Answer: C, D

They should include service credits and a service level agreement. Service Credits allow the buyer to claim back if the service drops below an agreed standard. That standard needs to be clearly out-lined in an SLA. See p.31 for more details


by Walton at Mar 07, 2026, 02:20 PM

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Buck
8 hours ago
Agreed! D) service credit is also important. It compensates for downtime.
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Lavonna
6 days ago
I think C) service level agreement is essential. It defines performance expectations.
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Belen
11 days ago
Totally agree with the first two options!
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Carma
16 days ago
Not sure if insurance really fits here.
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Polly
2 months ago
Wait, unliquidated damages? Isn't that a bit risky?
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Cordell
2 months ago
I think service credit is also a must.
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Josefa
2 months ago
Definitely need a service level agreement!
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Lucia
3 months ago
Insurance could also be relevant in this situation.
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Cassandra
3 months ago
Wait, can they really enforce that? Seems tricky.
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Marva
3 months ago
Service credit is a must for compensation!
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Evelynn
3 months ago
Unliquidated damages? Not sure that's the right fit here.
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Nobuko
3 months ago
Definitely need a service level agreement!
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Lavina
3 months ago
I practiced a similar question, and I think both the service level agreement and service credit would cover Tutu's needs for compensation.
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Skye
4 months ago
I feel like unliquidated damages might not be the best choice here since they can be hard to quantify.
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Adelina
4 months ago
I'm not entirely sure, but I remember something about service credits being a way to compensate for downtime.
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Audry
4 months ago
I think a service level agreement is definitely important to outline the expected performance and remedies for failure.
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