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Which of the following is the model form of contract for construction which is recommended by World Bank?
FIDIC is the International Federation of Consulting Engineers (or Fdration Internationale des Ingnieurs Conseils in French). FIDIC has produced many publications, including the model form contracts, best practice guidances, research on sustainability, integrity and risk management. FIDIC model form contracts have been developed by this organisation since 1999, now they consist of several different books which are marked by colours. Thus, FIDIC model contracts also have the nickname 'Rainbow suite of contracts'. Basically, the 'Rainbow Suite' include the following books:
* Yellow book: Plant and Design-Build Contract (2 editions: 1999 and 2017)
* Silver book: EPC/Turnkey Contract (2 editions: 1999 and 2017)
* Red book: Construction Contracts (2 editions: 1999 and 2017)
* Emerald book: Conditions of Contract for Underground Works (1st Ed 2019)
* Blue-Green book: Dredgers Contract (2 editions: 2006 and 2016)
* Gold book: Design, Build and Operate Contract Guide
* Pink book: Construction Contract Multilateral Development Bank Harmonised Ed (2 editions: 2005 and 2010)
This type of model contract is commonly used around the world because its author, International Federation of Consulting Engineers, collaborates closely with development banks such as World Bank, Africa Development Bank, Asia Development Bank, etc. Every construction project that is financed by these institutions must adopt the FIDIC contracts.
The Joint Contracts Tribunal, also known as the JCT, produces standard forms of contract for construction, guidance notes and other standard documentation for use in the constructionindustry in the United Kingdom. From its establishment in 1931, JCT has expanded the number of contributing organisations.
ITC (International Trade Centre) produces contracts specifically designed for small companies doing international business, covering the sale of goods, distribution, services and joint ventures. Many small companies are now engaged in international trade, but don't have access to the necessary contract forms to protect themselves. ITC and leading legal experts developed eight generic contract templates that incorporate internationally recognized standards and laws for most small business situations.
CIPS has several model forms of contract designed specifically for IT buying and servicing.
LO 3, AC 3.1
A procurement officer decides to approach the supply market regarding a procurement activity that will specify the use of technology that is very new to the market. The procurement officer is taking this step before the formal tender process is started. Is this approach permitted?
Early market engagement is encouraged in procurement best practices. It helps procurement teams understand new technologies, identify capable suppliers, and inform the development of effective specifications and contract terms. However, it must be non-binding and conducted fairly to ensure no supplier gains an unfair advantage.
Company A based in Canada signed a commercial contract with Company B in Egypt. Both countries are Contracting States to Vienna Convention on Contracts for the International Sale of Goods. The contract states that "The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of Canada". Which of the following set of rules will be applied if dispute between contracting parties occurs?
Where the sale of goods is between two businesses in different Contracting States, then it is international and the CISG rules of law automatically apply unless they have been excluded. A contract clause stating that the contract is subject to the legal systems and courts of a particular country overrides or excludes the CISG rules, since the local rules of that country would apply instead.
So the answer should be Canada's legal system.
LO 1, AC 1.2
A supermarket purchases a new batch of house cleaner from new supplier. The supermarket is concerned about possible damage that the house cleaner may cause to consumers' floor. What type of insurance must they cover?
Product Liability Insurance is a form of general liability insurance meant to protect a business from financial and legal consequences as a result of bodily injury or property damage due to the use of the business's sold goods or products. Situations that are typically covered by Product Liability Insurance may include:
- A customer harms herself because of the faulty packaging on one of your products
- A drapery set that a customer purchased from your business was highly flammable and caught on fire, eventually damaging her entire kitchen
- A customer with a severe allergy finds trace amounts of tree nuts in your homemade gourmet muffins
- A homemade house cleaner that you sell damaged one of your customer's entire hardwood floor
- A customer becomes sick with food poisoning after eating old shellfish at your restaurant, goes to the hospital, and incurs medical costs caused by your contaminated food products
- A customer's pet becomes ill from ingesting some lining in a pet toy product that you sell
In the scenario above, the supermarket is purchasing and reselling house cleaner, which can be covered by product liability insurance.
Public liability insurance is a type of business insurance that covers the cost of claims made by the public that happen in connection with the business activities.
Professional indemnity (PI) insurance is a commercial policy designed to protect business owners, freelancers and the self-employed if clients claim a service is inadequate.
LO 3, AC 3.2
Maximum Score 1
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?
Modern Slavery (C) and Sustainability (D) are core social and environmental issues under ESG and ethical procurement policies.
Indemnity and warranty are legal clauses, not social or environmental considerations.
Which of the following contracts would be best suited to a 'variable pricing' arrangement?
Variable pricing is suitable to situations when the cost of certain elements of the product fluctuate unpredictably. For road building, asphalt fluctuates regularly. Furthermore, 5 years are long period, then variable pricing is the most appropriate method to achieve value for money and control budget.
A contract for window cleaning during the next three months is a short-term service contract, fixed price is the most suitable method.
A contract for the supply of lubricating oil for immediate delivery is an one-off contract, only fixed price is applicable.
A contract for the supply of 100 printing machines to be delivered next month is also an one-off contract.
LO 3, AC 3.3
Exam domains verified against: Official CIPS L4M3 exam guide, last checked October 2026.
Analyse the documentation comprising commercial agreements such as invitations to tender, specifications, KPIs, contractual terms and pricing schedules. Understand the legal principles of offer and acceptance, consideration, intention to create legal relations, and capacity to contract. Compare different types of contractual arrangements including one-off purchases, framework agreements, mini-competitions, call-offs and services contracts.
Sample question from this domain above: Q1
Analyse how to draft specifications and develop market dialogue with suppliers. Understand the use of standards in specifications and how to balance standardisation of requirements with product range. Learn to include social and environmental criteria and apply Information Assurance principles. Appraise KPIs and service level agreements to assess quality performance, timeliness, cost management, resources and delivery.
Analyse contractual terms for external organisations including express terms and standard terms of business. Recognise use of model form contracts such as NEC and FIDIC. Identify key terms covering indemnities, liabilities, sub-contracting, insurances, guarantees and liquidated damages. Understand pricing arrangements including fixed pricing, cost plus reimbursable, indexation and price adjustment formulae, incentivised contracts and payment terms.
Common questions about the exam itself
