CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions:

1. Which three of the following can the procurement function use to integrate sustainability into contract pricing and payment terms?

A) Flexible price agreements
B) Incentivized payment terms
C) Payment terms focused on supporting multinational corporations
D) Pricing based on quality focus
E) Pricing mechanisms focused on developing large-scale businesses

2. A Letter of Intent (LOI), also known as a Memorandum of Understanding (MOU), constitutes legally binding contractual terms in a commercial contract.
Is this statement true?

A) No, because a letter of intent is document used during negotiation but not a term of contract always
B) Yes. Because a letter of intent is a legally binding contractual term and a condition of contract
C) Yes. Because a letter of intent is used for every contract as a contractual term
D) No. Because a letter of intent is used for contract management part only

3. The development of a documented process to assess the environmental performance of suppliers prior to appointment, would be covered by which part of an ISO 14001:2015 environmental management system?

A) Support
B) Operation
C) Context of the organization
D) Performance evaluation

4. A Fair Trade-certified coffee cooperative located in a rural area is undergoing an audit to assess its compliance with Fair Trade standards. During the audit, several non-compliance issues are identified, requiring immediate corrective action to align with International Labour Organization (ILO) standards.
For each identified breach, match the corresponding Fair Trade Principle with the most relevant ILO Standard by selecting the appropriate option and placing it in the table below.
Breach 1: Workers in the coffee processing plant are exposed to prolonged noise levels during their shifts. However, many employees do not have or are not using proper hearing protection, raising serious concerns about potential hearing damage.
Breach 2: A significant number of workers, particularly local laborers, receive wages below the living wage threshold. This has resulted in financial hardship for their families, despite the cooperative's Fair Trade certification.
Breach 3: The cooperative is engaged in environmentally harmful waste disposal practices, frequently dumping waste into nearby streams. This has led to increasing concerns among local communities and environmental advocacy groups regarding the negative impact on the local ecosystem.
Breach 4: The cooperative exhibits gender-based employment disparities, where women are not appointed to certain roles, particularly managerial and supervisory positions. Additionally, the required uniforms for these roles fail to accommodate women, further restricting their opportunities due to health and safety regulations.

A) Respect to the environment: Employers must adopt practices that reduce environmental impact and ensure that the working environment does not harm the local ecosystem
B) Good working conditions: Workers must be provided with a safe working environment that meets all health and safety standards, including protective equipment
C) Fair Payment: Workers must receive fair wages that meet the minimum living wage requirements.
D) No discrimination, gender equity, freedom of association: Employers must ensure gender equality in hiring practices and provide equal opportunities for all workers, regardless of gender.

5. Fresh Delight, a natural fruit juice company, sources fruit from Citrus Co. under a contract with a "time of the essence" and "retention of title" clause. Citrus Co. delivers fruit every Monday, but Fresh Delight has failed to pay for the last two deliveries. Claiming ownership under the retention of title clause, Citrus Co. attempts to reclaim the most recent delivery. Does Citrus Co. have a valid legal claim to retrieve the goods despite having delivered them?

A) Yes - the product can be reclaimed under any circumstances
B) No - if the delivery was made on time, it belongs to Fresh Delight
C) Yes - the product still belongs to Citrus Co
D) No - if Fresh Delight signed for the delivery, Citrus Co. has no right to reclaim it

Solutions: