Express terms are those that have been specifically mentioned and agreed upon by the parties, either orally or in writing, at the time the contract is made. 'Contract particulars' (such as price, quantity, and delivery dates) and the 'terms and conditions' document are the core, explicitly stated components of the agreement.

Conversely, terms can also be implied into a contract. 'Legislation' (statute) and 'custom and practice' are primary sources of implied terms. These are not explicitly stated by the parties but are read into the contract by the courts or by law to reflect legal requirements or established industry norms.

1. Legislation: This is a source of implied terms (e.g., the Sale of Goods Act 1979 implies terms about quality), not terms expressly agreed by the parties.

2. Custom and practice: This is a source of implied terms, where provisions are assumed to be part of the contract due to established norms within a specific trade or industry.

1. CIPS. (2018). Commercial Contracting L4M3 Study Guide. Profex Publishing. Page 54

Section 2.3

"The contents of a contract

" distinguishes between express and implied terms. It states

"Express terms are those which are specifically agreed by the parties to the contract... Implied terms are those which are not expressly included in the contract but are ‘read into’ it by the courts or by statute."

2. McKendrick

E. (2020). Contract Law: Text

Cases

and Materials (9th ed.). Oxford University Press. Chapter 9

"What is in the Contract?"

Section 1

"Express Terms

" clarifies that express terms are the explicit promises made by the parties. Section 2

"Implied Terms

" details how terms are implied by courts

by custom

and by statute (legislation).

3. University of London. (2022). Contract law Study Guide (LA1040). Chapter 6

"The content of the contract and the principles of interpretation

" pp. 101-108. This guide explicitly separates express terms

which are "agreed between the parties themselves

" from implied terms

which are inserted by the courts or by statute. It lists "Terms implied by custom" and "Terms implied by statute" as categories of implied terms.

Consideration is what one party provides in exchange for the other party's promise, forming a legally binding contract. In this scenario, which is based on the landmark case Chappell & Co Ltd v Nestlé Co Ltd [1960], the customer's consideration consists of everything they were required to provide to receive the promotional item. This includes both the monetary payment of 1s 6d and the three chocolate bar wrappers. The court held that the wrappers, although of trivial intrinsic value to Nestlé, were stipulated as part of the price and were therefore part of the consideration, as they were intended to increase sales of the chocolate bars.

C. “Rockin’ Shoes” record: This is the consideration provided by Nestlé to the customer, not the other way around.

D. The voucher: This is an alternative form of consideration provided by Nestlé, not by the customer.

E. Milk chocolate bar: The purchase of the chocolate bar is a separate transaction. The promotional offer specifically required the wrappers as part of the consideration, not the bar itself.

1. McKendrick

E. (2021). Contract Law: Text

Cases

and Materials (10th ed.). Oxford University Press. In the discussion of consideration

the case of Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87 is analyzed

establishing that the wrappers formed part of the consideration alongside the monetary payment (Chapter 5

Section 5.2.3 'Consideration must be sufficient but it need not be adequate').

2. University of London. (2022). Contract Law Study Guide (LA1040). In Chapter 3

'Consideration and intention to create legal relations'

the guide discusses the principle that consideration must be sufficient but not adequate

using Chappell v Nestlé as a key example. It explicitly states

"The House of Lords held that the wrappers were part of the consideration" (Section 3.2.1

p. 43).

3. Chen-Wishart

M. (2018). Contract Law (6th ed.). Oxford University Press. This text explains that in Chappell v Nestlé

"The majority of the House of Lords held that the wrappers were part of the consideration... Nestlé had stipulated for them and they had value in promoting Nestlé’s sales" (Chapter 3

Section 3.3.1 'The general rule').

A Service Level Agreement (SLA) is a formal contract between a service provider and a client that specifies, in measurable terms, the services the provider will furnish. It is the primary tool used to quantify the minimum acceptable quality of service. SLAs define specific metrics (Key Performance Indicators or KPIs) such as uptime, response time, and resolution time, and outline penalties or remedies for failing to meet these targets. This makes it a binding agreement that documents a common understanding about services, priorities, and responsibilities.

A. Service charter: This is a high-level public statement about the standards of service customers can expect from an organisation, not a formal, quantifiable agreement between specific parties.

B. Service guarantee: This is a specific promise about a service, with a pledge of compensation (e.g., a refund) if the promise is not met, rather than a comprehensive agreement on all service levels.

D. Service standard: This is a benchmark or a specified level of quality that a service is expected to meet. It is a component within an SLA, but it is not the agreement itself.

1. Chartered Institute of Procurement & Supply. (2018). Commercial Contracting (L4M3). CIPS Knowledge. Chapter 5

Section 5.2

"Service level agreements (SLAs)". The text explains that an SLA is a "contractual tool for managing the performance of a supplier" and details its role in defining "specific

measurable

achievable

realistic and time-bound (SMART) key performance indicators (KPIs)" to quantify service quality.

2. Lysons

K.

& Farrington

B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. In the chapter on Supplier Relationship Management

the text distinguishes SLAs as formal documents that "define the level of service to be provided" using quantifiable metrics

contrasting them with less formal service standards or guarantees. (Specific reference: Chapter 18

pp. 485-487).

3. University of Cambridge. (n.d.). Service Level Agreement (SLA) Toolkit. Information Services. Retrieved from https://www.is.cam.ac.uk/toolkit/slas. This university resource defines an SLA as "an agreement between an IT Service provider and a customer" that "describes the IT Service

documents service level targets

and specifies the responsibilities of the IT Service provider and the customer." This aligns with the definition of a quantifiable agreement.

Implied terms are provisions that are not expressly written in a contract but are considered part of the agreement by operation of law. The two primary sources for these terms are statute and common law.

Statute: Legislation, such as the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982, automatically implies certain terms into contracts to ensure a minimum level of protection (e.g., goods must be of satisfactory quality and fit for purpose).

Legal Precedence (Common Law): Courts may imply terms based on established legal principles from previous cases. This can be to give the contract 'business efficacy' (i.e., to make it work as the parties intended) or because the term is customary in a particular trade.

B. Definition & interpretation: This is an express clause within a contract that clarifies the meaning of terms used.

C. Contract appendix: This is a supplementary document attached to a contract, forming part of the express written agreement.

E. Contract clause: This is a specific, written provision within the contract, making it an express term by definition.

1. Chartered Institute of Procurement & Supply. (2018). Commercial Contracting (L4M3). CIPS Publications. In the section covering the contents of a contract

the guide distinguishes between express terms and implied terms

identifying the main sources of implied terms as statute (e.g.

Sale of Goods Act 1979) and common law (terms implied by the courts based on precedent or custom). (Note: Specific page numbers vary by edition

but this is a core concept in the module's section on contract terms).

2. McKendrick

E. (2020). Contract Law: Text

Cases

and Materials (9th ed.). Oxford University Press. Chapter 9

"What are the terms of the contract?"

section 3

"Implied Terms

" details the two principal ways terms are implied: by the courts (common law/precedent) and by statute.

3. The Sale of Goods Act 1979 (as amended). c. 54. United Kingdom. Part II

Section 14

"Implied terms about quality or fitness

" is a direct example of a statute implying terms into a contract for the sale of goods. Available at: https://www.legislation.gov.uk/ukpga/1979/54/section/14

The increasing integration of social and environmental criteria into specifications is driven by both external pressures and internal business motivations. Stakeholder pressure (B) is a primary external driver, encompassing demands from customers, investors, governments (through legislation), and non-governmental organisations for greater corporate responsibility. This forces organisations to embed sustainability into their procurement practices. Concurrently, process efficiencies (A) act as a powerful internal driver. By specifying criteria that reduce waste, energy consumption, or material use, organisations can achieve significant cost savings and operational improvements, creating a strong business case for sustainability that aligns environmental goals with financial performance (the triple bottom line).

C. Insufficient financial resources: This is a constraint or barrier that would hinder the adoption of potentially more expensive sustainable options, not a driving force for their use.

D. Scarcity of environmentally sustainable suppliers: This represents a supply market challenge or a barrier to implementing sustainable procurement, rather than a reason to increase the use of such criteria.

E. Carbon footprint measure: This is a tool or a key performance indicator (KPI) used to quantify and manage environmental impact, rather than a fundamental driving force itself. The drivers are the reasons why an organisation would want to measure its carbon footprint, such as stakeholder pressure or efficiency goals.

1. Chartered Institute of Procurement & Supply (CIPS). (2018). CIPS Level 4 Diploma in Procurement and Supply

L4M3 Commercial Contracting Study Guide. Page 115-116. The guide explicitly lists drivers for ethical and responsible sourcing

including "reducing costs" (which relates to process efficiencies) and "managing reputational risk" and "compliance with legislation" (which are forms of stakeholder pressure).

2. Carter

C. R.

& Rogers

D. S. (2008). A framework of sustainable supply chain management: moving toward new theory. International Journal of Physical Distribution & Logistics Management

38(5)

360-387. https://doi.org/10.1108/09600030810882816. In their foundational model (Figure 1

p. 368)

the authors identify "External pressures/incentives" (e.g.

regulation

customers

society) and the potential for "improved economic performance" as key antecedents or drivers for sustainable supply chain management.

3. Walker

H.

Di Sisto

L.

& McBain

D. (2008). Drivers and barriers to environmental supply chain management practices: Lessons from the public and private sectors. Journal of Purchasing and Supply Management

14(1)

69-85. https://doi.org/10.1016/j.pursup.2008.01.007. The study categorises drivers of environmental supply chain management

prominently featuring "Regulations

" "Customers

" and "Societal pressures" (all forms of stakeholder pressure) alongside internal drivers like "cost reduction" (a direct outcome of process efficiency).

The frequency of on-time deliveries is a classic Key Performance Indicator (KPI) used in contract management. This metric is inherently quantitative, as it is measured and reported using numbers. For example, it can be expressed as a percentage (e.g., 95% of deliveries were on time), a ratio (e.g., 95/100), or a simple count. This method provides an objective, data-driven assessment of supplier performance against an agreed-upon service level, making it a numerical measure.

A. Qualitative assessment: This involves non-numerical data like opinions or descriptions (e.g., quality of communication), which is not suitable for measuring the frequency of a specific event like delivery.

C. Binary measure: While a single delivery can be viewed as binary (either on-time or not), the question asks for the frequency over a period, which requires aggregating these outcomes into a numerical value.

D. Subjective measure: This is based on personal judgment or opinion. On-time delivery is an objective measure based on predefined, verifiable criteria (e.g., agreed delivery dates and times).

1. CIPS (Chartered Institute of Procurement & Supply). (2018). Commercial Contracting L4M3 Study Guide. Profex Publishing. In the section on Key Performance Indicators (KPIs)

it is emphasized that metrics like 'On-Time In-Full' (OTIF) are quantitative measures used to objectively track supplier performance. Performance is tracked using numerical data against a baseline or target (See Chapter 6: Measuring Contract Performance).

2. Lysons

K.

& Farrington

B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. Chapter 15

"Supplier Relationship Management

" distinguishes between quantitative (objective) performance measures

such as delivery reliability

and qualitative (subjective) measures. On-time delivery is presented as a primary example of a quantitative

numerical metric.

3. Monczka

R. M.

Handfield

R. B.

Giunipero

L. C.

& Patterson

J. L. (2016). Purchasing and Supply Chain Management (6th ed.). Cengage Learning. Chapter 10

"Supplier Performance Management

" details the use of quantitative measures for performance evaluation. Delivery performance is categorized under quantitative metrics

typically measured as a percentage of on-time deliveries

reinforcing its status as a numerical measure.

In an urgent situation that necessitates deviating from the standard one-month tender process, the procurement manager's priority is to ensure governance and procedural integrity are maintained. The first step is to create a full business justification (E), detailing the urgency, the operational impact of delays, and why the standard process is unsuitable. This document serves as the basis for seeking high-level authority approval (D) to use an expedited or non-competitive procurement method. These two actions are critical prerequisites before any sourcing or supplier engagement can begin, ensuring the decision is transparent, defensible, and properly authorized.

A. Design new specification: The user department (Manufacturing) is typically responsible for providing the technical specification for the part they require; this is not the procurement manager's primary immediate action.

B. Develop relationships with potential suppliers: This is a long-term, strategic activity. In an urgent situation, the focus is on rapid sourcing and acquisition, not foundational relationship-building.

C. Review contract performance: This action is relevant for managing existing contracts and suppliers. As this is a "new special part," there is likely no existing contract to review.

1. CIPS (2018) Procurement and Supply in Practice

L4M3 Commercial Contracting

CIPS Study Guide. Profex Publishing Limited. The guide emphasizes that while speed is essential in urgent situations

procurement professionals must adhere to organisational governance. This involves documenting the reasons for bypassing standard competitive procedures and obtaining the necessary authorisations from senior management before proceeding. This directly supports the need for justification (E) and approval (D). (Specific reference: Chapter on Sourcing Processes and Tendering).

2. Lysons

K.

& Farrington

B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. This foundational text discusses exceptions to competitive tendering

such as emergencies or single-source situations. It highlights that such deviations must be supported by a robust

documented justification and require formal approval at an appropriate level of authority to ensure transparency and mitigate risks of impropriety. (Specific reference: Chapter 10

'Sourcing Strategies').

3. University of Oxford. (2023). Financial Regulations and Procedures

Part 6: Procurement. Section 2.3 'Quotations and Tenders'. As an example of official best practice documentation

these procedures state that departures from the normal tendering process (e.g.

for urgency) require a "waiver of regulations" which must be fully justified in writing and approved by the Head of Department or other designated high-level authority. This aligns with options E and D. (Available on the University of Oxford's Finance Division website).

To successfully manage a long-term contract with a variable pricing arrangement based on indices, the buying organisation must possess strong market knowledge. This knowledge is crucial for several reasons: selecting the most appropriate and relevant index, understanding the supplier's cost structure to validate the formula, and continuously monitoring whether the indexed price remains competitive against actual market prices. Without this insight, the buyer risks being locked into a formula that does not reflect true market conditions, potentially leading to significant overpayment and failing to achieve value for money over the contract's term.

B. Selection of base year: This is a critical component decided during the initial contract negotiation, not an ongoing capability required to manage the contract.

C. Value for money: This is the strategic objective or desired outcome of the procurement process, not the specific capability needed to manage this type of pricing mechanism.

D. Economy of scale: This is a purchasing principle related to gaining cost advantages from volume, which is not directly required for managing a price adjustment clause.

---

1. Chartered Institute of Procurement & Supply (CIPS). (2019). Commercial Contracting L4M3 Study Guide. Profex Publishing. In the section covering pricing arrangements (Chapter 5)

the guide emphasizes that for variable pricing mechanisms like indexation to be effective

the buyer must have a thorough understanding of the market to select a relevant index and to monitor its continued appropriateness. It states that market intelligence is key to preventing prices from becoming uncompetitive. (Specific reference: Chapter 5

Section 3: Variable pricing arrangements).

2. Lysons

K.

& Farrington

B. (2020). Procurement and Supply Chain Management (10th ed.). Pearson. Chapter 15

"Price and Total Cost of Ownership

" discusses contract price adjustment clauses. The text explains that the successful application of such clauses is contingent on the buyer's knowledge of the specific market

its cost drivers

and the availability of reliable

relevant indices. This knowledge is essential to negotiate a fair mechanism and manage it effectively. (pp. 388-389).

3. Bailey

P.

Farmer

D.

Crocker

B.

Jessop

D.

& Jones

D. (2015). Procurement Principles and Management (11th ed.). Pearson Education. Chapter 11

"Price and Cost Analysis

" details the use of price adjustment formulae and indices. It highlights that the buyer's ability to analyse market trends and cost breakdowns is a prerequisite for using these tools

ensuring the formula is fair and the resulting price remains aligned with the market.

Mark-up is a financial metric that represents the difference between the selling price of a good or service and its cost, expressed as a percentage of the cost. The formula is (Profit / Cost) × 100. This directly calculates the ratio of profit generated relative to the cost incurred to produce or acquire the item. It is a cost-based pricing tool used by suppliers to determine the selling price and ensure a desired profit is achieved on top of the costs.

A. Gearing: This measures a company's financial leverage by comparing its debt to its equity, indicating its reliance on borrowed funds.

B. Margin: This measures profitability relative to the selling price (revenue), not the cost. The formula is (Profit / Selling Price) × 100.

D. Liquidity: This assesses a company's ability to meet its short-term financial obligations using its current assets.

1. Chartered Institute of Procurement & Supply. (2019). Commercial Contracting (L4M3) Study Guide. Stamford

UK: Profex Publishing. In Chapter 5

'Financial Analysis in Commercial Contracting

' the guide distinguishes between mark-up and margin

stating

"Mark-up is profit as a percentage of cost price... Margin is profit as a percentage of the selling price." (p. 124).

2. Drury

C. (2018). Management and Cost Accounting. 10th ed. Cengage Learning. Chapter 11

'Pricing decisions and profitability analysis

' explains that "A mark-up on cost is the profit margin expressed as a percentage of cost" (p. 368). This text is a standard reference in university-level accounting courses.

3. Weygandt

J. J.

Kimmel

P. D.

& Kieso

D. E. (2021). Financial & Managerial Accounting. 4th ed. Wiley. In the chapter on cost-volume-profit analysis

the text clarifies the calculation: "Markup = (Sales Price - Cost) / Cost

" directly showing it as a ratio of profit to cost (Chapter 5

Section 5.3).

A liquidated damages clause is included in a contract to pre-determine the amount of compensation payable in the event of a specific breach. Its primary commercial purpose is to provide certainty for both parties and to avoid the difficulty, expense, and time involved in proving the actual financial loss in court. By agreeing on a genuine pre-estimate of the likely damages upfront, the parties remove the potential for future arguments over the correct measure of damages, thereby simplifying the remedy process. This is particularly useful in situations where calculating the actual loss after a breach would be complex or speculative.

A. Other remedies for breach of contract exist, such as unliquidated damages (assessed by a court), specific performance, or injunction.

B. A liquidated damages clause must be a genuine pre-estimate of loss; if its purpose is to punish or deter a breach, it is deemed a penalty clause and is legally unenforceable.

D. The clause specifies the amount of compensation but does not guarantee the timing of payment, as the occurrence of the breach itself may still be disputed.

1. CIPS. (2018). Commercial Contracting L4M3 Study Guide. Profex Publishing Limited. Chapter 5

Section 5

'Damages'

pp. 138-139. The guide states

"The purpose of liquidated damages is to provide a pre-estimate of the loss that is likely to be suffered if there is a breach of contract... This avoids any argument about the amount of damages that should be paid."

2. University of London. (2022). Contract Law Study Guide (LA1040). Chapter 16: Damages for Breach of Contract

Section 16.4 'Liquidated damages and penalty clauses'. It explains that such clauses promote certainty and avoid the cost and difficulty of proving actual loss

stating

"The advantages of a liquidated damages clause are that it avoids the cost and difficulty of proving actual loss."

3. The legal principle distinguishing liquidated damages from penalties was established in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79. Lord Dunedin's speech clarified that the essence of liquidated damages is a "genuine covenanted pre-estimate of damage

" whereas the essence of a penalty is a payment "stipulated as in terrorem of the offending party." This directly refutes the notion that the clause is for penalising a supplier (Option B).