Free L3M3 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

English law, with Scots and European law being different.

In many Commonwealth countries, the legal system used is based on historic English law, thus many

lawyers around the world are familiar with many of the fundamental concepts of English law,

including the law of contract.

Contracts should state which legal system applies.

Rewarding poor performance is not to be encouraged.

The other three options shown are often capable of motivating suppliers.

The best quotation is selected, which would meet the specification as well as meeting the other re-

quired criteria; and in order to progress things round the procurement cycle, a purchase order would

be issued.

Non-disclosure agreement, also known as a confidentiality agreement.

Both penetration pricing and promotional pricing begin with the market price. Marginal pricing and

rate of return pricing both look at the costs of doing something, and base their calculations on cost.

These last two are therefore cost-based approaches to pricing.

Offer and acceptance together make up 'agreement'.

In English law, implied terms exist, even if you can't see them in the contract documents. They

commonly derive from statute. An example is the Sale of Goods Act.

An agreement between two or more parties which is enforceable in law.

This definition separates a contract from a social or domestic arrangement, in that contracts are in-

tended to be enforceable at law. The other answers shown here dilute the concept, and so are unac-

ceptable as answers to the question.

The seller tries to penetrate the market, to build market share, depriving competitors of those sales,

and hoping to retain the customers for future sales. This is penetration pricing.

'Cost mark-up' would be based on cost - add a certain amount to create the selling price. For exam-

ple, in UK clothing retail often simply 100% added to the cost of the goods - simple, fast and hope-

fully sufficient to coverall costs, as well to enable the goods to sell. This approach hinges on effec-tive

buying, at the right cost.

Promotional pricing is a temporary price drop to encourage purchases of a particular product or

range.

Competitive pricing would simply mean pricing at around the market level - monitoring market and

competitor prices.

Transfer.

Some of the risk has been transferred to the insurance company.

Win-win negotiation is not a 'zero-sum game': the sum of the value achieved is greater than zero -

fresh value is created. It is a 'positive sum game'.

It's a retrospective rebate, and can be a highly significant way of (often hidden) discounting for many

businesses - sometimes a 'life-saver'. Something to think about in an open book costing situa-tion -

are there rebates to suppliers which are 'forgotten' in discussions?

The items are complementary. Complements.

For example, a Tesla car and a Tesla charging point.

The 'contribution' (selling price minus variable cost) for each bottle is 50 cents. Divide the fixed costs

by the contribution (100,000 / 0.5) = 200,000

If your textbook or tutor has not covered this type of calculation, don't worry; it is a difficult ques-

tion and is unlikely to be a significant issue in the CIPS examination.

The 'firm and unequivocal offer' and 'the basis of a contract' indicate the reference to a formal and

binding tender procedure. The answer is therefore 'invitation to tender'.