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NEW QUESTION 27
What is the purpose of a limitation on liability clause?

• A. it caps a company's exposure to risk
• B. it provides an accurate pre-estimate of potential loss
• C. it passes the responsibility to the other party
• D. it allows a party to claim on insurance if something goes wrong

Answer: A

Explanation:
A limitation of liability caps a company's exposure to risk. In SOME cases this may mean that the responsibility passes to the other party- but not always. For this reason option 2 is correct and 4 isn't. Option 1 is the definition of liquidated damages and 3 is just a made-up answer. See p.20 for more information on Liability

NEW QUESTION 28
Which of the following is a source of breach in a contract?

• A. liability
• B. negligence
• C. warranty
• D. force majeure

Answer: B

Explanation:
Negligence can be a source of a breach. P.42

NEW QUESTION 29
John is a chocolatier and has a big order of Easter Eggs coming up in April. He also creates chocolates to sell all year round in his shop, but Easter Eggs represent a large proportion of his profits each year. John's chocolate making machine has just broken and he has ordered a new one to be delivered in February. However due to a delay, the manufacturer of the new machine can't deliver until May. What course of action can John take?

• A. John can claim for the loss of the Easter Eggs but not his regular earnings
• B. John can claim for loss of his regular earnings but not for the easter eggs
• C. John can claim for both the loss of the Easter Eggs and his regular earnings
• D. John cannot claim for any loss as these are in the future and he doesn't know what these would be

Answer: C

Explanation:
3 is the correct answer. This question is testing your understanding of 'consequential loss' which is explained on p.109. Consequential loss is where you can claim damages for incidental loss (loss that isn't a direct cause of the breach of the contract, such as future earnings). In this scenario the breach is the late delivery and the incidental damage is John not being able to sell any chocolate in his shop or make his Easter Eggs. There are questions like this in the real exam- remember to think what the textbook would say and don't overthink this. The scenario doesn't always give you a lot of information (for example this doesn't say if there is a contract in place) so think- which of these four options is the most logical and what is this question trying to test me on.

NEW QUESTION 30
Which of the following will you put into box 5?

• A. liquidated damages
• B. Contract variation
• C. liability
• D. payment terms

Answer: D

Explanation:
The correct answers are as follows:

This is payment terms - the discussion is about amending the payment terms from 60 days to 30 days.

NEW QUESTION 31
Which of the following conflict resolution styles involves a strict timeline and is commonly used within the construction industry?

• A. litigation
• B. adjudication
• C. arbitration
• D. conciliation

Answer: B

Explanation:
Adjudication has strict timescales (this is one of the advantages of using this conflict resolution method). It has roots in the construction industry and has been widely used since the 1990s. See p.76 for more information

NEW QUESTION 32
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