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NEW QUESTION 32
Mark is a consultant who works with building managers and advises them on how to make their buildings safer. What type of insurance should Mark have?

A. Public Liability
B. Professional Indemnity
C. Product Liability
D. Property Insurance

Answer: B
Explanation:
Mark needs professional indemnity insurance. Types of insurance is a known exam topic and the study guide does not cover this particularly well. Types of insurance is mentioned on p.25 but Pro-fessional Indemnity Insurance isn't really explained and this does come up in the exam. Professional Indemnity Insurance is needed when your job is to give advice to people (like as a Consultant). It's used for if the advice you give turns out to be bad. For example, if Mark told the building manager he should get ABC Fire Alarm installed, and actually this Fire Alarm doesn't meet the necessary Health and Safety standards, he could get sued by the building manager. He could then claim on his Professional Indemnity Insurance.

NEW QUESTION 33
Which of the following would constitute an offer? Select TWO:

A. a bid on an auction
B. a display in a shop window
C. an advert on a website
D. an auction
E. a price proposal that is valid for 14 days

Answer: A,E
Explanation:
Offers include bids on an auction and a price proposal that is valid for 14 days. The other three options are Invitations to Treat. See p.3 for the full list of what constitutes an Invitation to Treat. The tricky thing here is that an auction is an invitation to treat but a bid on an auction is an offer. An auction is an ITT because you're encouraging people to make an offer to you. A bid on the auction is the offer (you offer to buy something at a price you propose).

NEW QUESTION 34
Parky Parks Ltd has a contract with Slides R Us for the provision of children's playground equipment. The contract contains a clause for liquidated damages and puts the figure at £500k. Which of the following statements is correct? Select TWO

A. costs incurred above £500k will be covered by Parky Parks Ltd
B. liquidated damages is a genuine estimate of loss
C. Damages under the amount of £500k are not required to be paid to Parky Parks
D. Liquidated damages needs to be a 100% accurate figure
E. If damages exceed £500k Parky Parks can apply to the courts to get Slides R Us to pay above this amount

Answer: A,B
Explanation:
The true statements are: liquidated damages is a genuine estimate of loss (it doesn't need to be a 100% accurate figure, so long as it's your best estimate) and costs incurred above £500k will be covered by Parky Parks Ltd. That's one of the disadvantages of stating liquidated damages in a contract for a buyer- if damages total more than this, you have to foot the bill for the rest. See p.30 for more info

NEW QUESTION 35
Which of the following statements about penalty clauses is not true?

A. they are used to deter the parties from breaching the contract
B. they provide damages in excess of the true cost of a breach
C. they can harm the working relationship
D. they are illegal

Answer: D
Explanation:
2 - penalty clauses are not illegal. However they may be judged excessive in a court of law and thrown out. Most contracts will instead opt for liquidated damages rather than a penalty clause. See p.90

NEW QUESTION 36
What is a Prime Contract?

A. A contract between a public sector organisation and the taxpayer
B. A contract between an end customer and a company which has full responsibility for its performance
C. A contract between a supplier and a subcontractor
D. A contract between a buyer and main supplier

Answer: B
Explanation:
"A contract between an end customer and a company which has full responsibility for its perfor-mance" is the correct answer. This is the definition of Prime Contract given on p. 47

NEW QUESTION 37
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