The CIPS Commercial Contracting (L4M3) exam is a good choice and if the candidate manages to pass CIPS Commercial Contracting exam, he/she will earn CIPS Level 4 Diploma in Procurement and Supply Certification. Below are some essential facts for CIPS L4M3 exam candidates:
Michelle contacts Hannah and asks her if she would be interested in purchasing her car for 2000. Hannah immediately takes 2000 to Michelle and says she wants to buy the car. Michelle subsequently refuses to proceed. Has the contract between Michelle and Hannah been made?
Correct : A
To solve the question, you must distinguish the following notion:
- Offer: The case of Storer v Manchester City Council [1974] 1 WLR 1403 outlines that an offer is: An expression of willingness to contract on specified terms, with the intention that it is to be binding once accepted
- Acceptance: in order for a contract to be formed, the offer must be accepted. Acceptance represents the meeting of the minds of the parties to the contract -- both agree to exchange something for the other (payment, services, goods, etc.).
- Counter offer: is an offer made in response to a prior offer.
- Invitation to treat: An important distinction to make in contract law is that between an offer and an invitation to treat. An invitation to treat is usually an invitation for another party to make an offer. It may also be defined as an indication that a party is open to negotiation.
Here are some key distinctions of offers and invitation to treats.
Offer:
* Certain promise to be bound
* Clear and specified terms
* The conduct or words of the party show certainty
* There is no room for negotiation
Invitation to treat:
* There is room for negotiation
* There is an invitation for offers
* There is a request for information
* Lack of certainty
In the scenario above, initially Michelle just gives an invitation to treat because she is asking whether Hannah is interested to buy her car (request for information from Hannah). Hannah may reject or go into a negotiation with Michelle. Then, Hannah makes an offer by taking the money and shows her intention to be legally bound. At this point, when Hannah's offer is present, Michelle can accept or reject. When she rejects, the contract is not formed. The answer must be 'No, because Michelle has rejected Hannah's offer on buying the car'.
- Definition of Counter Offer
- Formation of the contract
- CIPS study guide page 28-35
LO 1, AC 1.2
Under which of the following scenarios an RFQ is most likely to be used?
Correct : A
The request for quotations is a procurement method that is used for small value procurements of readily available off-the-shelf goods, small value construction works, or small value services procurements. Request for quotations works best under a framework agreement
This procurement method is also known as invitation to quote and shopping, and it does not require the preparation of tender documents to the same extent as open tendering, request for proposals or two-stage tendering.
Among 4 options:
- 'Purchase of a small number of standardised products under a framework agreement': the products are standardised and there is a framework agreement in place, so RFQ is the best solution.
- 'Purchase of complex machinery': Complex machinery is often a large purchase. Furthermore, suppliers' quality may vary. So RFQ is not suitable, instead, depending on the situation, buyer may opt ITT or RFP to purchase this type of machinery.
- 'Design of a unique and complex software code': Unique and complex software is not off-the-shelf, thus RFQ is not suitable.
- 'When the buying organisation does not know the requirements in details and needs the input from suppliers': When the detailed requirements are unknown, the best solution is request for proposal or developing dialogue with suppliers.
- Request for Quotations
- CIPS study guide page 3-4
LO 1, AC 1.1
