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63 Cards in this Set
- Front
- Back
Discuss THREE merits of performance specifications in commercial agreements. |
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Describe TWO circumstances in which it may be appropriate to use a conformance specification in a commercial agreement. |
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Explain FIVE requirements for ensuring the creation of a legally binding contract |
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Explain the nature and operation of a ‘call-off contract’. |
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Suggest how the ‘battle of the forms’ may be avoided. |
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Discuss TWO key performance indicators that could be used in a contract with a supplier. Illustrate your answer with relevant examples.
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Explain THREE reasons why it may be more difficult to develop specifications in contracts for services rather than in contracts for goods. |
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Explain the main legal differences between an ‘offer’ and an ‘invitation to treat’.
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Define the term ‘framework agreement’ and outline the circumstances in which it may be appropriate to use a framework agreement with a supplier. |
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Identify FIVE details of the buyer’s requirement that might be included in a standard enquiry (request for quotation) form. |
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A best-practice tender procedure would include a number of steps for the preparation of the invitation to tender. |
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Explain the purposes of a documented specification within a commercial agreement |
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What common ways would you signal/communicate a requirment for a re-buy? |
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What details are typically in an RFQ form? |
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List the approaches to tendering |
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List ethical issues in the use of RFQs during the tendering process |
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Define 'open tendering' |
ITT is widely advertised and open to any potential bidder |
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Define 'selective tendering' |
suppliers are pre-qualified and 3-10 suppliers are shortlisted for ITT |
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Define 'restricted open tenders' |
suppliers are partly pre-qualified by advertising of the tender being restricted e.g. to appropriate technical journal |
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What are the steps for the 'preperation of the ITT' |
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Define 'Specification' |
A statement of the requirments to be satisfied in the supply of a product or service |
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What is the purpose of a specification? |
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Explain FIVE reasons why a purchaser might favour an ‘output’ specification over a ‘conformance’ specification |
Output specifications are: |
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Outline FIVE characteristics of an effective specification.
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– Clear and unambiguous
– concise and comprehensive – compliant with laws/regs – unbiased – free from jargon – logically structured – proper version control |
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Explain THREE reasons in favour of the purchasing function becoming involved in the drafting of a specification.
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ensuring that a good response can be obtained from a competitive market, by e.g. providing an independent review of the content and quality of the specification
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Explain FOUR reasons why writing a specification for services may be more difficult than writing a specification for physical products. |
* Products are tangible, easier to assess for compliance to spec
* Products are more uniform, services are variable * Assessment of services is more subjective * Service contracts are longer duration so spec needs to accommodate for future change |
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Explain THREE reasons why a specification may not be effective in communicating requirements
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– Too detailed
– missing important detail – Poorly structured – Not version controlled – Lacks clarity – Uses vague language |
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Describe THREE circumstances in which a conformance based specification could be used.
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– dimensions and weights are critical
– an exact match to specifications is required – when level of quality or safety is paramount – need to fit into existing assemblies – must match a chemical formula or a recipe – a particular brand is required – buyer has the most technical knowledge, or holds IPR |
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Explain ONE possible advantage and ONE possible disadvantage of involving suppliers in producing a specification.
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Advantages:
• experience • knowhow • innovation Disadvantages: • lock–in • Bias in the specification, favouring one supplier • IPR issues |
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Explain the reasons for using standards within specifications.
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– convenience
– reduced time and effort – specifying common and agreed levels of quality – facilitating comparison of bids on a like–for–like basis – reduction in the costs associated with bespoking facilitating international trade/communications; and variety reduction |
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Describe FOUR typical key performance indicators (KPIs) and outline how they might be used to measure performance in a contract. |
* Delivery
* Lead times * Quality * Prices * Risk management * Flexibility * Responsiveness * Technical support * Compliance * Environmental impacts * Timeliness of invoicing |
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Explain THREE different purposes of key performance indicators in contracts with suppliers.
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* Compare suppliers
* Make suppliers aware of their responsibilities * Identify underperformance by supplier * Identify good suppliers for future work |
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Describe TWO key performance indicators that could be included in a contract for catering services. |
* opening hours
* service and food availability * numbers of customers served * customer feedback from surveys or other channels * reports from a ‘mystery shopper’ on quality of service * portion control * breadth of menu * opening hours * numbers of customer complaints and/or plaudits * health and safety record; food quality * venue cleanliness |
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Describe FOUR typical key performance indicators (KPIs) and outline how they might be used to measure performance in a contract.
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* delivery
* lead times * quality, prices * risk management * Flexibility * Responsiveness * technical support * Compliance * environmental impacts * accuracy and timeliness of invoicing and other administrative and financial procedures |
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What are the key questions when drawing up a spec? |
Procurements five rights;
1. Quantity 2. Price 3. Product 4. Quality 5. Place/timing |
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List types of conformance specifications
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1. technical drawing
2. chemical formula 3. brand 4. sample 5. market grade 6. standard |
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What is the process of developing KPIs?
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1. identify critical success factors
2. identify measures of each factor 3. develop and agree KPI |
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What are expressed terms?
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inserted into a contract by agreement of the parties. |
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What are implied terms? |
automatically included in contract by relevant statute e.g. goods of sale act |
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What is a condition? |
a vital term of the contract, breach results on terminating the contract and damages |
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What is a warranty? |
a non-vital term of the contract. Breach can result in claim for damages |
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What are model form contracts? |
- published by third party experts for specific industries - fair balance for buyers and suppliers - mostly used in engineering and construction |
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Why should purchasers have a knowledge of the law? |
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what are the elements of a legally binding contract? |
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what are the two rules of consideration? |
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A contract may be vitiated (flawed) by a number of reasons such as:
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Mistake, misrepresentation, duress, undue influences or illegality
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What does it mean when the contract is void?
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no legal effect on either party as though no contract was ever formed
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What does it mean when the contract is voidable? |
either party can make the contract void
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What is misrepresentation during a contract?
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a false statement of material fact made before or at the time the contract is formed which was intended to induce the other party into the contract
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What is duress and undue influence? |
when pressure is placed on the party to agree to a contract which doesn’t represent their true intentions or wishes. Since the party did not freely consent to the contract, it is voidable by the coerced party
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What are the requirments to make an offer legally valid?
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1. it must be a definite statement of willingness to be bound in a contract 2. The offerer intends to be bound by 3. must be communicated successfully to the offeree 4. offer must still be 'open' when accepted |
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what are the risks for the buyer if agreeing to contract on the suppliers standard terms? |
1. liability of risks and costs 2. cost uncertainty 3. poor quality goods 4. disadvantageous payment terms 4. no power in supplier management
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when is a sale of goods defined as international according to the 'uniform law on sales' |
1. when the parties are from different nations and the goods are being transported from one nation to antoher. OR 2. offer and acceptence is made in a different nation to where the delivery will occur |
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When are one off purchases advantageous to the buyer? |
1. there are plenty of suppliers in the market offering same goods 2. purchase costs are low 3. price advantages can be obtained through competition.
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What is a standing offer?
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1. an alterative to a one-off purchase 2. where there has been a general invitiation to supply a series of things as and when they are needed. 3. The supplier has won a tender 4. such an offer is open to a series of acceptances whenever an actual order is placed. 5. if a buyer places fewers orders and stated in the tender he is NOT inbreach of contract
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What is blanket ordering and when is it appropriate?
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An agreement to handle reoccuring purchases. Avoids having to go through the procurement cycle for every order. Typically for low value high volume. E.g. stationary
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What is Call-off contract?
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a contract where a commitment is given to purchase a given qty over a period. Operates similar to a standing offer.
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What is a systems contract?
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a borader agreemnt for reoccuring procurement. Requires high level of trust between parties. No commitment of qty given.
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What is a framework agreement?
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A way of arranging a nuber of similar contracts efficently. Reccomended for public sector. Most times the framework is not a contract, but sets basic T&Cs which apply for call-offs.
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What are SLAs?
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formal statements of performance management requirements specifying the exact level of service to be provided
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What is a contract of hire of goods?
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The owners allows the hirer to have possession for a specific period. Not a contract of sale as no intention to transfer ownership. They are often standard contracts.
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What is a Hire Purchase agreement?
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The hirer has the option to purchase once all the agreed installments have been made. Often used if the need for an asset is ongoing.
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What is a Leasing agreement?
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a long-term financed-based agreement. The lessor acts as middle man to purchase the asset and lease out to the lessee. Once all pre-determined payments are made the lessee gains posession. Until possession transfers the lessee the lessor maintains ownership to use as collatoral incase of non-payment |