Chapter 15 — Purchasing Law and Ethics
63. _____ refers the standard terms and conditions that are usually preprinted on the back of forms used by the purchaser
(and the seller).
a.
RFQ
b.
PO
c.
RFI
d.
Boilerplate
e.
None of the above.
Easy
Analytic
64. Under the UCC, [the] _____ applies to contracts for goods worth more than $500 or any contract that cannot be fully
performed in one year.
a.
b.
c.
d.
e.
Easy
Analytic
65. The doctrine of _____ holds that if one or more parties made a promise, even orally, he or she cannot renege on that
promise if the other party acted on reliance on the promise.
a.
caveat emptor
b.
promissory estoppel
c.
anticipatory breach
d.
consideration
e.
None of the above.
Moderate
Analytic
66. Which of the following is not a category of contract cancellation?
a.
Cancellation for default.
b.
Cancellation for convenience of the purchaser.
Analytic
Chapter 15 — Purchasing Law and Ethics
c.
Cancellation by mutual assent.
d.
Liquidated damages.
e.
Liquidated damages.
Moderate
Analytic
67. _____ can be defined as failure of one of the parties to live up to the terms and conditions of the contract.
a.
Cancellation for default
b.
Cancellation for convenience of the seller
c.
Cancellation for convenience of the purchaser
d.
Cancellation by mutual assent
e.
None of the above.
Moderate
Analytic
68. _____ occur[s] when either party fails to perform the obligations due under the contract (without a valid or legal
justification).
a.
Damages
b.
Cancellation
c.
Restitution
d.
Expectancy
e.
Breach of contract
Easy
Ethics
69. A/An _____ provision stipulates the mechanism to be used in determining any costs and damages to the injured party
in the event of a breach of contract.
a.
mutual assent
b.
restitution
c.
liquidated damages
d.
reliance
e.
expectancy
Easy
70. _____ is money the plaintiff actually paid to the defendant in connection with the contract.
a.
Reliance
b.
Restitution
c.
Expectancy
d.
Due diligence
e.
None of the above.
Easy
Analytic
71. _____ is money the plaintiff lost because he or she was relying on the contract, depending on the defendant to live up
to his or her obligations under the contract.
a.
Expectancy
b.
Restitution
c.
Due diligence
d.
Mutual assent
e.
Reliance
Moderate
Analytic
72. _____ is money the plaintiff was hoping to gain from the contract.
a.
Reliance
b.
Restitution
c.
Restitution
d.
Expectancy
e.
None of the above.
Easy
Analytic
73. _____ are equal to the difference between the value of the purchased goods at the time of delivery and the goods’
value at the time of specified delivery.
a.
General damages
b.
Consequential damages
c.
Liquidated damages
Analytic
Chapter 15 — Purchasing Law and Ethics
d.
Incidental damages
e.
Specified damages
74. _____ include expenses reasonably incurred in inspection, receipt, transportation, and the care and custody of goods
appropriately rejected by the purchaser.
a.
General damages
b.
Consequential damages
c.
Specified damages
d.
Freight claims
e.
Incidental damages
75. _____ are those expenses incurred by the purchaser because the goods were not delivered when expected or as
specified.
a.
Incidental damages
b.
General damages
c.
Consequential damages
d.
Specific damages
e.
None of the above.
76. _____ are those that result if the terms of the contract are not fulfilled and must be defined prior to the breach under
the terms of the contract.
a.
Consequential damages
b.
General damages
c.
Incidental damages
d.
Reliance damages
e.
Liquidated damages
77. After the point of acceptance, the supplier’s rights _____ and the purchaser’s rights _____.
a.
increase….decrease
b.
increase….increase
c.
decrease….increase
d.
decrease….decrease
e.
There is no change in either sets of rights before or after the point of acceptance.
78. Which of the following is false regarding the acceptance and rejection of goods?
a.
Once the purchaser accepts the goods, there is only one recourse – to make a claim against the supplier.
b.
The purchaser has the right to send the rejected goods back even if the supplier does not consent to this action.
c.
The UCC specifies that the purchaser does not have the legal right to withhold payment from the supplier once
acceptance has been made.
d.
Purchasers have a legitimate right to inspect contracted goods before accepting or rejecting them.
e.
A purchaser may revoke a prior acceptance if a problem is discovered that substantially impairs the value of
the goods.
79. Which of the following is not one of the benefits that the UCC provides to buyers?
a.
If a seller makes an offer in writing, the seller has to live up to it for the period of time stated.
b.
Verbal agreements, when confirmed in writing and if no objection is made, are valid.
c.
The conflict between a buyer’s purchase order terms and a seller’s acknowledgement terms will generally be
resolved according to the two firms’ prior conduct.
d.
As far as warranties are concerned, the purchasing manager can legally rely on the supplier to provide the item
needed to do the job.
e.
None of the above.
80. Rather than change existing contract law, in 1999 the _____ adapted existing “paper and pencil” concepts to the
electronic age, meaning that it makes electronic records equivalent to written documents and electronic signatures similar
to handwritten signatures for legal purposes.
a.
UCC
Chapter 15 — Purchasing Law and Ethics
b.
Supreme Court
c.
HSPD-12
d.
RFI
e.
UETA
Moderate
Bloom’s: Remembering
Ethics
81. In its most basic form, a _____ is defined as a promise or representation made by the seller, which, if necessary, can
be legally enforced.
a.
statement of fact
b.
verbal agreement
c.
verbal agreement
d.
warranty
e.
buyer’s right of rejection
Easy
Bloom’s: Remembering
Ethics
82. According to the UCC, any affirmation of fact or promise made by the seller to the buyer which relates to the goods
and becomes part of the basis of the bargain creates a/an _____ that the goods shall conform to the affirmation or promise.
a.
implied warranty
b.
express warranty
c.
general warranty
d.
warranty of merchantability
e.
warranty of title
Moderate
Bloom’s: Remembering
Analytic
83. The implied warranty of _____ means when the seller at the time of contracting has reason to know of any particular
purpose for which the goods are required, and the buyer is relying on the seller’s skill or judgment to select or furnish
suitable goods.
a.
fitness for use
b.
merchantability
c.
express warranty
d.
general warranty
e.
warranty of infringement
84. _____ essentially indicates that the supplier warrants that it has ownership of the goods and that they are not stolen or
subject to any security interest or liens.
a.
Warranty of infringement
b.
Implied warranty of merchantability
c.
Implied warranty of fitness for use
d.
Warranty of title
e.
None of the above.
Moderate
Analytic
85. [The] _____ refers to the supplier’s guarantee that the goods being exchanged do not illegally violate another party’s
patent protection.
a.
Warranty of title
b.
Express warranty
c.
Warranty of infringement
d.
Implied warranty of fitness for use
e.
Implied warranty of merchantability
Easy
Analytic
86. The _____ describes the origin of the shipment, provides specific directions for the carrier, delineates the
transportation contract terms, and functions as a receipt for the shipment.
a.
bill of lading
b.
implied warranty of transportation
c.
freight bill
d.
acknowledgment
e.
implied warranty of merchantability
Moderate
Analytic
87. On _____, the freight bill is presented on the effective day of the shipment.
Moderate
Analytic
Chapter 15 — Purchasing Law and Ethics
a.
FOB origin shipments
b.
collect shipments
c.
prepaid shipments
d.
FOB destination shipments
e.
None of the above.
88. On _____, the freight bill is presented on the effective day of delivery.
a.
prepaid shipments
b.
FOB origin shipments
c.
FOB destination shipments
d.
collect shipments
e.
all shipments, regardless of terms
89. _____ essentially describe who is responsible for the selection of a carrier, payment of the freight bill, and the method
in which the title of goods passes between the purchaser and the supplier.
a.
Freight bills
b.
Bills of lading
c.
Prepaid shipments
d.
Collect shipments
e.
Delivery terms
90. _____ indicates that the purchaser is responsible for payment of transportation costs and assumes title of the goods at
the supplier’s shipping dock.
a.
F.O.B. origin
b.
F.O.B. delivered
c.
F.O.B. carrier
d.
F.O.B. intermediate storage point
e.
F.O.B. destination
91. _____ indicates that the supplier is responsible for transportation, and the purchaser assumes title of the goods at his or
her own shipping dock.
a.
F.O.B. origin
b.
F.O.B. shipping point
c.
F.O.B. destination
d.
F.O.B. carrier
e.
None of the above.
92. In order to be valid, freight claims must be filed within _____ of the date of actual or reasonable date of delivery.
a.
10 days
b.
30 days
c.
9 months
d.
2 years
e.
There is no time limit for filing freight claims.
93. If the carrier has refused to pay a freight claim, then the claimant has _____ from the time the claim was disallowed to
file for legal relief in the courts.
a.
10 days
b.
1 month
c.
2 years
d.
10 years
e.
There is no time limit for pursuing freight claims in the courts.
94. According to the UCC, which of the following is not one of the buyer’s rights?
a.
Reject defective goods that the seller cannot repair within a reasonable time.
Chapter 15 — Purchasing Law and Ethics
b.
Unilaterally cancel a purchase contract for any reason.
c.
Revoke acceptance of goods if the buyer discovers defects.
d.
Sue for breach of contract.
e.
Retain the right to recover costs and expenses caused by a breach of warranty.
Moderate
Analytic
95. _____ involves the buyer seeking a court order forcing the seller to deliver the goods.
a.
Arbitration
b.
Specific performance
c.
An implied warranty of merchantability
d.
An express warranty
e.
None of the above.
Easy
Analytic
96. A/An _____ is designed to afford protection for persons who create original works, such as books, software, songs,
and films.
a.
patent
b.
trademark
c.
trade secret
d.
copyright
e.
None of the above.
Easy
Analytic
97. All of the following are requirements to receive trade secret protection under law except _____.
a.
almost every one outside the company is aware of it
b.
the organization must take steps to minimize or preclude the distribution of sensitive information
c.
it is economically valuable
d.
it is not generally known
e.
it is kept as a secret
Moderate
98. The _____ is an attempt by the United Nations to facilitate international trade by removing legal barriers.
a.
U.C.C.
b.
CISG
c.
FCPA
d.
FTCA
e.
UNICEF
Easy
Ethics
99. Which of the following is a rule of ethical behavior in purchasing?
a.
Buyers must commit their attention and energies for the organization’s benefit rather than personal enrichment
at the expense of the organization.
b.
A buyer must act ethically toward suppliers or potential suppliers.
c.
Buyers must uphold the ethical standards set forth by both their organization and the purchasing profession.
d.
All of the above.
e.
None of the above.
Moderate
Ethics
100. Which of the following is falseregarding the risks of unethical behavior by a purchaser?
a.
The buyer pays too little for a purchased good or service.
b.
Unethical behavior presents a personal risk to a buyer’s reputation.
c.
buyer who performs an unethical act runs the risk that the act is also illegal.
d.
Sellers quickly become aware of buyers who are open to offers “on the side.”
e.
A buyer who makes purchase decisions based on factors other than legitimate business criteria risks the
reputation of the entire firm.
Moderate
Ethics
101. [A/An] _____ is any misrepresentation by a buyer that falls just short of actual fraud.
a.
Ethics
b.
sharp practice
c.
Bribery
Ethics
Chapter 15 — Purchasing Law and Ethics
d.
conflict of interest
e.
None of the above.
Easy
Ethics
102. Which of the following is not a form of sharp practice?
a.
Willful use of misinformation.
b.
Exaggerating problems.
c.
Sharing information on competitive quotations.
d.
Knowingly withholding information during a negotiation.
e.
Taking unfair advantage of a supplier’s financial situation.
Moderate
Ethics
103. _____ involves giving preferential treatment to suppliers that are also customers of the buying organization.
a.
Personal buying
b.
Reciprocity
c.
Sharp practices
d.
Accepting supplier favors
e.
Conflicts of interest
Easy
Analytic
104. _____ occurs when a purchasing department purchases materials for the personal needs of its employees.
a.
Reciprocity
b.
Sharp practice
c.
Personal buying
d.
Conflict of interest
e.
Influence
Easy
Analytic
105. _____ is defined as the power that somebody has to affect other people’s thinking or actions by means of argument,
example, or force of personality.
a.
Negotiation
b.
Influence
c.
Ethics
d.
Sharp practice
e.
Reciprocity
Easy
Analytic
106. Which of the following is not one of the actions a firm can take to enhance ethical behavior?
a.
Wiretapping and security cameras.
b.
Developing a statement of ethics.
c.
Closer buyer-seller relationships.
d.
Internal reporting of unethical behavior.
e.
Commodity rotation and limits of authority.
Moderate
Ethics
107. _____ is the idea that organizations and institutions have an obligation to society that extends beyond compliance
with regulations in considering the broader effects of their actions.
a.
Ethics
b.
Influence
c.
Corporate social responsibility
d.
Mutual assent
e.
Warranty of infringement
Easy
Ethics