Free L5M3 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

Indemnity isn't usually used for confidentiality agreements - this is stated on p.21 of the study guide.

This is because it's hard to indemnify against- you don't know what the consequence of a breach of

confidentiality is going to be so it's hard to quantify. Unliquidated damages is more suitable. The

study guide does state that indemnity is frequently used in intellectual property rights, software

licence agreements and share purchase agreements. This is also written on p. 21.

Negligence can be a source of a breach. P.42

Where there's no order of precedence, it is assumed that all documents have equal significance. This

is a direct quote from the study guide p.15

The correct answers are as follows:

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This is payment terms- the clues here are 'financial' and 'progress payments'

The purpose of liability clauses is "to limit commercial and financial exposure"- this is a direct quote

from p.2. Liability is the amount that a company owes to another party- this is why contracts will

focus on limiting their liability as much as possible.

3 is the correct answer. This question is testing your understanding of 'consequential loss' which is

explained on p.109. Consequential loss is where you can claim damages for incidental loss (loss that

isn't a direct cause of the breach of the contract, such as future earnings). In this scenario the breach

is the late delivery and the incidental damage is John not being able to sell any chocolate in his shop

or make his Easter Eggs. There are questions like this in the real exam- remember to think what the

textbook would say and don't overthink this. The scenario doesn't always give you a lot of

information (for example this doesn't say if there is a contract in place) so think- which of these four

options is the most logical and what is this question trying to test me on.

The first stage is 'identify the nature and source of the conflict'. Stage 2 is assess the impact of the

breach, stage 3 is look at remedies available and stage 4 is agree on a way forward and type of

conflict resolution. These stages are explained on p.62 of the study guide.

The correct answers are 1, 4 and 5. Negotiation does NOT involve a third party and the outcome is

private / confidential. See p.63 for more information on negotiation

Crystalised means ' a dispute has occurred which qualifies for resolution by adjudication'. This is a

direct quote from p. 144

The correct answers are as follows:

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This is a contract variation as they are changing the number of staff and their hours

This is Mediation. The private caucus is when each of the parties meets in private with the media-tor,

this is usually after a joint session between the three parties. See p.71 for more information on

mediation

The correct answer is "only future obligations of the parties are excused and discharged" - all cur-rent

and past obligations need to be fulfilled, or remedied (e.g. through liquidated damages). When an

innocent party terminates a contract, they are still obliged to fulfil their own obligations. P.47

Incoterms assign costs and responsibilities about when products are delivered. See p. 37 for a full list

of the different Incoterms. You don't need to know all Incoterms for the exam, but it's a good idea to

know what they are and why they'd be put into a contract

Arbitration ticks all of the boxes required by R3D3. Mediation isn't correct because it's not binding.

Negotiation isn't correct because there's no 3rd party. Litigation isn't correct because it's not

confidential. See p. 80 for more on arbitration.

The correct answers are as follows:

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This is consequential loss. Brian Air is going to lose the profits from the sales of the flights it had sold.

Now those flights won't go ahead Brian Air can claim for consequential loss which would help

balance the books.

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).

yes- if there is a variation clause and both parties agree. This would usually be written in as a 'price adjustment clause' but if it's not, then it could be agreed and signed by both parties as a 'contract variation'. See p.16 for more details

Yes- the supplier made an offer and Jenny accepted it by making a payment is the correct answer.

The other three options are incorrect: 'yes- a counter offer has been made' = there is no counter-

offer made in this example - a clarification is not a counter-offer / 'no- the clarification constitutes a

conditional acceptance' = clarifications are not conditional acceptance / 'no- a contract has not been

signed' = there doesn't need to be a signed document- acceptance can be through performance.

Issuing the payment would be considered acceptance via performance. See p 2-12 for more

information on conditional acceptance, counter offers and acceptance of offers.

Benchmarking should be included- this is common in long-term contracts where variables can af-fect

the market over time. By including benchmarking, harry gets assurance that the product he

purchases will meet the market expectations over the next 10 years. The other answers are incorrect;

1- there is no mention of liability in the question so this is incorrect. 2- service credits would be used

if he is concerned the product would be offline/ not perform (it's a form of damages) but this isn't

the case in this scenario. He's not worried about underperformance, he's worried about

obsolescence. 4- change control is for when there are multiple versions of a contract due to

amendments being made.

A breach of representation is a major/ fundamental breach and allows the innocent party to rescind

the contract and claim damages. A Breach of Representation is when you provide false information

about who you are- this might have been a fundamental reason as to why the contract went ahead. If

it turns out not to be true, the other party has the right to cancel the contract and claim damages.

See p.126