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Exam Code L4M3
Exam Name Commercial Contracting
Vendor CIPS
Total Questions 233
Last Updated 26-Oct, 2026
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Free L4M3 Practice Questions

Explore 6 free practice questions for the CIPS L4M3 exam and review the answers and explanations to support your preparation.

  1. Question 1

    Multiple answers

    Express terms in a contract are stated in which of the following? Select TWO that apply

    • Option A:

      Orality


      Correct
    • Option B:

      Idea


      Correct
    • Option C:

      Trade customs


      Correct
    • Option D:

      Writing form


      Correct
    • Option E:

      Statutes

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: A, D

    Explanation

    Express terms are the terms of the agreement which are expressly agreed between the parties. Ideally, they will be written down in a contract between the parties but where the contract is agreed verbally, they will be the terms discussed and agreed between the parties.

    Implied terms are terms implied into the contract by the courts. They are not expressly set out in the contract but are taken to be as effective as if they were and as if they had been included from day one of the contract. The express terms and any implied terms together create the legally binding obligations on the parties.

    [Reference:, - Contracts: Express and Implied Terms, - CIPS study guide page 126-132, LO 3, AC 3.1, , , ]
  2. Question 2

    Single answer

    Setting key performance indicators (KPIs) for supplier performance should ensure ...

    • Option A:

      Reduced vendor base


      Correct
    • Option B:

      Managed supply risks


      Correct
    • Option C:

      Lowest price for products


      Correct
    • Option D:

      Earliest delivery

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: B

    Explanation

    KPIs track and control supplier performance, helping to identify and mitigate supply risks such as late delivery or poor quality.

    They are a proactive management tool, not a price or sourcing mechanism.

    [Reference: CIPS L4M3 Commercial Contracting – “Purpose and use of KPIs in contract management.”, , ]
  3. Question 3

    Single answer

    Which of the following should be applied when measuring frequency of on-time deliveries during a contract period?

    • Option A:

      Qualitative assessment


      Correct
    • Option B:

      Numerical measure


      Correct
    • Option C:

      Binary measure


      Correct
    • Option D:

      Subjective measure

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: B

    Explanation

    Number of on-time deliveries can be quantified, then numerical measures can be applied.

    Frequency of on-time deliveries is measured as on-time deliveries as a percentage of total no. of deliveries for period.

    LO 2, AC 2.2

  4. Question 4

    Multiple answers

    Procurement professionals must have an awareness of labour standards and environmental, social and governance issues when contracting with suppliers. Which TWO of the following are relevant for consideration?

    • Option A:

      Indemnity

      Correct
    • Option B:

      Warranty


      Correct
    • Option C:

      Modern Slavery


      Correct
    • Option D:

      Sustainability

      Correct
    • Option E:

      ISO9000 accreditation

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: C, D

    Explanation

    The question explicitly mentions labour standards and ESG (environmental, social, governance).

      Modern Slavery (C): relates directly to labour and human rights (forced labour, trafficking, child labour).

      Sustainability (D): covers environmental and social impacts, resource use, and long-term responsibility, key under ESG.

    Indemnity and warranty are general legal/contractual concepts, and ISO9000 is a quality management standard, not specifically focused on labour/ESG.

    [Reference: CIPS L4M3 Commercial Contracting – Ethical and responsible procurement (modern slavery, sustainability, ESG)., , ]
  5. Question 5

    Single answer

    Which of the following is always automatically considered as a contract?

    • Option A:

      Call-off


      Correct
    • Option B:

      Framework arrangement


      Correct
    • Option C:

      Performance management framework


      Correct
    • Option D:

      Framework agreement

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: A

    Explanation

    - A call off or a term contract is one which exists for a fixed period of time, rather than for a specific purpose

    - A formal framework agreement does have some legal standing but it is not a contract, primarily because there is no consideration involved, but it is an overarching (or umbrella) agreementunder which contracts can be created (this holds true in English law but may not be right in other jurisdiction)

    - A framework arrangement is a rather loose set-up, without any legal standing. It usually occurs when an organisation has decided for itself to limit the number of suppliers it is willing to work with and, through a purely internal process, sets up an approved list of such suppliers.

    - A performance management framework including KPIs and targets, the assessment scheme and incentives, disincentives, bonuses and penalties. It is a schedule to a contract and only legally binding if it is referred from contract clauses.

    [Reference: CIPS study guide page 59-63, LO 1, AC 1.3, , , ]
  6. Question 6

    Single answer

    Which of the following is likely to reduce risks of different rules regarding when offers and acceptance become effective between legal systems?

    • Option A:

      Withdrawal protocol


      Correct
    • Option B:

      Letter of intent


      Correct
    • Option C:

      Time lapse


      Correct
    • Option D:

      Deemed receipt protocol

      Correct
    Show Answer & Explanation Hide Answer & Explanation

    Correct Answer: D

    Explanation

    Regarding rule of offer and acceptance, there are some differences among legal system around the world. For example, mailbox rule is generally applied in common law countries such as UK, US, Australia,.. while it is ignored in civil law countries. To clarify on rule of offer and acceptance in international trade, offerors may use expressed terms in their offers. These terms known as deemed receipt protocol.

    [Reference: CIPS study guide page 35, LO 1, AC 1.2, , , ]