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NEW QUESTION 45
When assessing damages caused by a breach, which of the following statements is true?
- A. damages are limited to what is stated within the contract
- B. damages attempt to compensate the innocent party for errors made by the offending party
- C. damages can be difficult to assess before a breach has occurred and therefore should be decided through conflict resolution
- D. damages attempt to position the innocent party in the position that they would have been in had the contract been performed as expected
The correct answer is: ‘damages attempt to position the innocent party in the position that they would have been had the contract been performed as expected’. This is a quote from p. 121 Option1 is incorrect as unliquidated damages aren’t stated in a contract. Option 2 is incorrect because liquidated damages are an assessment of damages before a breach. Option 4 is incorrect because not all breaches are caused by errors (they can be caused by negligence or the offending party withholding something).
NEW QUESTION 46
Which of these statements about mediation is true? Select TWO
- A. mediation is flexible
- B. mediation involves a third party who makes a judgement on the issue
- C. mediation can be used as a stalling tactic
- D. mediation is expensive
- E. mediation produces legal precedents
The correct answers are 1 and 3. The other options are false; Mediation does not produce legal precedents- only litigation can do this. Mediation is a cheap dispute resolution option (much cheaper than arbitration or litigation) and the third party has no authority on the matter- they are there as a facilitator of dialogue, not to make a judgement. For more information on mediation see p.74
NEW QUESTION 47
Sam is a factory manager and has purchased a new fixed asset on a loan purchase agreement. There is a forbearance agreement between the Factory and the provider. What does this mean?
- A. the lender is able to demand full payment of outstanding balances in case of none pay-ment
- B. the lender is able to charge interest on the purchase in line with RPI
- C. the lender agrees to give the breaching party a period of time as an extension by which to meet their obligations
- D. the lender requires the buyer to assign a guarantor in case they cannot make payments
1 is the correct answer. This is a direct quote from p. 104 of the study guide.
NEW QUESTION 48
Popsi Cula is a manufacturer of sugared beverages and produces over 5000 tonnes of soda each day. It is extremely important that ingredients are delivered to the factory on specific days in order for the production to keep to its very tight schedule. Popsi Cula is onboarding a new supplier – which of the following clauses would it be important for the contract to contain?
- A. time is of the essence
- B. limitation of liability
- C. KPIs
- D. liquidated damages
A Time is of the Essence Clause should be included. This stresses the importance of obligations being completed on time, with any delays (e.g. in delivery of ingredients) being treated as a breach of a condition. The other three options are probably important to have in a contract, but don’t relate specifically to this example. See p.45 for more information on Time is of the Essence Clauses
NEW QUESTION 49
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