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INFORMATION FOR CANDIDATES The senior assessor’s report is written in order to provide candidates with feedback relating to the examination. It is designed as a tool for candidates - both those who have sat the examination and those who wish to use as part of their revision for future examinations. Candidates are advised to refer to the Examination Techniques Guide (see the following link: http://www.cips.org/en-GB/Qualifications/study-support/ ) as well as this senior assessor’s report. The senior assessor’s report aims to provide the following information:

An indication of how to approach the examination question

An indication of the points the answer should include

An indication of candidate performance for the examination question Each question has a syllabus reference which highlights the learning objectives of the syllabus unit content that the question is testing. The unit content guides are available to download at the following link: http://www.cips.org/Qualifications/About-CIPS-Qualifications/cipsqualifications/ ADDITIONAL SOURCES OF INFORMATION The Supply Management magazine is a useful source of information and candidates are advised to include it in their reading during their study. Please see the following link to the Supply Management website: http://www.supplymanagement.com/

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SECTION A Q1 (a) Assess whether Bluesea could be liable for the statements made on

its website and the verbal assurances it provided relating to the suitability of the software product

(12 Marks)

Analysis of the Question The question required candidates to assess a potential misrepresentation and/or breach of contract claim. Analysis of the Answer A definition of misrepresentation was required with recognition of the different types like fraudulent, negligent and innocent misrepresentation. Some attempt should have been made to apply at least one of the potential misrepresentations contained with the case study (website and/or verbal assurance as to suitability). Stronger answers would have been supported by case law like Bisset V Wilkinson, Esso Petroleum V Marsden, JEB Fasteners V Bloom or a practical example. Stronger answers should have differentiated between advertising ‘puff’ and a representation especially in relation to the website claims. A strong answer might also stress the important of who made the statements (experts) and the timing of such statements in order to establish a breach of contract claim. Excellent answers would discuss the rules that apply to potential exclusions of misrepresentation and be able to quote the important case of BSkyb V HP Enterprises. Exam Question Summary A significant number of candidates identified the potential for misrepresentation to have been committed, with strong definitions of misrepresentation produced in many cases. The varying types of misrepresentation were usually identified and there was some discussion of remedies. A greater number of answers than in previous papers which contained misrepresentation included some case law on this issue. Candidates often correctly discussed the legal status of the website material in terms of invitation to treat and included case law such as Fisher v Bell in support although this was a marginal issue. Some answers raised the possibility of a breach of S13 Sale of Goods Act (description) for which credit was given if suitably argued. A general weakness was the inability to quote recent case law especially the well-publicised case of BskyB V HP Enterprises. Q1 (b) Assuming that no standard terms have been agreed, assess the

legal basis of any possible contractual claim against Bluesea (13 Marks)

Analysis of the Question This question needed to refer to the Sale of Goods Act 1979 (as amended) in relation to the implied terms and the rule relating to acceptance of goods.

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Analysis of the Answer The concept of satisfactory quality should have defined and possible discussion of implied conditions. Supporting case law might be included. Additional marks were awarded for a detailed explanation of satisfactory quality ((freedom from minor defects, durability, appearance and finish etc.). Answers might also have discussed fitness for the purpose under S14 (3). Strong answers should also have discussed when acceptance takes place under the Sale of Goods Act. S34 provides buyers must be afforded a reasonable opportunity to check the goods to ensure conformity with the contract. S35 provided three situations when acceptance of goods has taken place. Excellent answers would have been able to explain that if acceptance has taken place, the implied conditions become warranties and the hotel will not be able to reject the contract. Excellent answers might also conclude that allowing repairs will not necessarily be viewed as acceptance of the software. A possible conclusion would be the goods have not been accepted (depends on the first breakdown) and therefore the Hotel can reject the contract. Even if the goods have been accepted, the Hotel is still entitled to a repair (or a replacement if the repairs are not satisfactory) Exam Question Summary Many answers identified the relevance of the implied terms found in section 14 (satisfactory quality; fitness for purpose) of the Sale of Goods Act 1979 (as amended). A significant number did, however, refer to the Supply of Goods & Services Act 1982, but credit was still given for suitably argued explanations of the meaning of the two implied terms. Some stronger answers showed the ability to develop the meaning of these two provisions in greater detail and supported the argument with suitable case law. A significant number of candidates also included some discussion of the claim for damages for breach of contract, with knowledge of the restrictions on unliquidated damages clearly evident. Case law was again included in support here. Almost no candidates identified the possible complication that termination for breach of contract may have been forfeited on the facts because of the delay in pursuing the claim (under section 35 Sale of Goods Act 1979). S34 and S35 need greater emphasis since they determine what remedies might be available for breach of the implied terms. Q2 Evaluate whether Bluesea could rely on any of its contractual

terms to successfully defend possible legal claims by the Hotel. (25 Marks)

Analysis of the Question The question required a reasonable knowledge of the legal rules applicable to exclusion clauses and an ability to apply those rules to the scenario presented. Analysis of the Answer

The first part of the question required a discussion of exclusion and limitation clauses including both common law and statutory tests. Each of the clauses will need to be incorporated into the contract. Strong supporting case law on the incorporation point would be L’Estrange V Graucob. The only common law rule that might defeat Bluesea’s claim is if the wording is unclear. Mention of the contra proferentum rule should also receive credit,

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especially in the use of the term warranty and the problems of defining direct and indirect costs. The case study clearly stated the contract was signed by both parties and therefore they have been incorporated. The hotel would not be able to defend itself on the basis that it was not aware of the terms but may be able to successfully argue that Clauses 6.2 would not apply if it can demonstrate the operating documents were not provided. Cases like Olley V Marlborough Court Hotel would assist an answer as would the previous dealings case of Spurling V Bradshaw.

Some attempt should have been made to apply the Unfair Contract Terms Act 1977 to the clauses. Clause 6.1 limits the effects of the statutory implied terms in the Sale of Goods Act and is therefore subject to S6 UCTA that provides if the buyer is a business, S13 – S15 Sale of goods Act can only be excluded if the clauses satisfies the requirements of reasonableness. Clause 6.3 is a limitation clause and is also subject to a reasonableness test.

In terms of UCTA strong answers will quote S11 of the Unfair Contracts Terms Act 1977. Supporting case law such as Watford Electronics Ltd v Sanderson CFL Ltd. Very strong answers will make a attempting at applying the schedule 2 factors to the situations (Bargaining position, inducement etc) as there are strong hints in Bluesea’s email. Credit should be awarded for different conclusions providing they are soundly-argued and supporting by relevant case law. Exam Question Summary Some candidates demonstrated very sound knowledge of the legal restrictions placed on exclusion and limited liability clauses in English law. The common law tests (incorporation based on reasonable notification; and the contra proferentem rule were often included with some sound use of case law. Most candidates were also able to identify the Unfair Contract Terms Act 1977 and referred to the requirement that most exclusions and limitations (if not banned) were subject to the test of fairness (or reasonableness). Far fewer answers were able to discuss how this test is judged (by using reference to the range of factors found in Schedule 2 of the Act). Similarly, case law on the Act was seldom included. Some answers did develop the issue of claimable damages and showed a sound grasp of the judicial rules that decide what can be (and what cannot be) claimed where unliquidated damages are involved. A number of answers demonstrated no real knowledge (or very little) of the law relating to exclusion clauses. It is surprising because of the frequency that this legal topic has been included in past papers. For example, many answers stated the implied terms under the Sale of goods Act could never be excluded which is simply not the case. The lack of supporting case law was disappointing especially more recent cases like Kingsway Hotel V Red Sky IT that have been fully covered in the Supply Management journal. SECTION B Q3 Ownership of goods and risk will always transfer to the buyer

when the goods have been delivered. Evaluate the legal validity of this statement.

(25 Marks)

Analysis of the Question This question required candidates to distinguish between ownership and risk of goods and when they transfer from the buyer to the seller.

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Analysis of the Answer The statement is incorrect. In many cases, though not all, ownership might pass on payment. Answers should have discussed, in the absence of some expresses provision, how the Sale of Goods Act makes provision for when ownership and risk passes to the buyer. The substance of the answer should have evolved around S18 and the five rules. The answer should have demonstrated an understanding of specific and unascertained goods. In the absence of any agreement, the Sale of Goods Act states ownership and risk pass at the same time (S20) Strong answers would be able to distinguish between ownership, risk and possession. There was likely to be discussion of a Romalpa clause and its effect. Reference will be made to S17 and the over-riding rule that ownership and risk pass when the parties intend it to. Excellent answers should have referred to the provisions of S19 that provide that a seller can reserve a right of disposal in the goods until certain conditions are fulfilled (usually payment). This is entirely consistent with the use of Romalpa clauses. Case law examples did would improve the marks awarded. Exam Question Summary For many candidates, this was the question that produced the highest mark, with marks of 18 or higher not being unusual for the most detailed responses. It was clear that many candidates had learnt the principles and relevant provisions to a high degree of accuracy, many citing four of five cases in support. The content of S16 – S20 of the Sale of Goods Act 1979 was impressively explained, with coverage of the different categories of goods and accurate descriptions of the five rules found in section 18 where the parties have not made clear their intentions as to transfer of ownership. Many answers also discussed the relevance of retention of title clauses (usually including some discussion of AIV v Romalpa Ltd), and also included some consideration of the relevance of Incoterms to this question. Mention of other types of contract (hire, hire purchase etc.) was also made. A small number of candidates thought that the question required a detailed discussion of the nemo dat doctrine and its exceptions – some only discussed this to the exclusion of everything else. It is important to realise that when the issue relates to the timing of ownership transfer (the ‘when’ question) it is S16 – S20 that are central. The nemo dat doctrine and S21 – S25 of the Sale of Goods Act 1979 (and related legislation) only become significant if the issue is whether ownership has passed at all (the ‘whether’ question). It was pleasing that many more candidates were aware of the need to consider S17 first before applying the S18 rules. S16 continues to be misunderstood in that it does not state that ownership of unascertained goods passes when the goods have been ascertained. Q4 A purchaser cannot normally make a successful claim against a third

party such as a subcontractor. Discuss the circumstances when the law will allow a purchaser to make a successful claim against a third party and analyse the limitations the law places upon such rights to sue.

(25 Marks)

Analysis of the Question The question required candidates to explain privity of contract and the various means of circumventing the problems created by privity of contract.

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Analysis of the Answer An answer is likely to contain a definition and an explanation of privity of contract with supporting case law like Dunlop V Selfridge. There are contractual ways to circumvent the privity rule and one is through a collateral contract which should be explained. Supporting case law such as Shanklin Pier V Detel received credit. Sound responses distinguished between strong representations and those made in sales literature. Another method is through negligence. The elements of negligence should have been explained. (Duty of care, breach of the duty and damage suffered). Donoghue v. Stevenson would be expected to be referred to. Outstanding answers might have referred to the limitations on negligence claims where the loss is purely financial as demonstrated in cases such as Junior Books V Veitchi and Simaan V Pilkington Glass A core answer also contained discussion of the Contract (Rights of Third Parties) Act 1999. A brief outline was required which should have referred to where the third party is expressly named in the contract or where the contract was designed to confer some benefit on the third party. Strong answers might explain other methods such as expressed collateral warranties, agency arrangements and indemnity clauses. Exam Question Summary

Most answers correctly identified the relevance of the doctrine of privity of contract to this question, included an accurate definition of the doctrine and the precedent case of Dunlop v Selfridge (usually with facts). Beyond this, answers varied in the number and choice of exceptions included. Collateral contracts were frequently identified, with some candidates able to explain the concept with accuracy. Almost all these answers included a detailed description of Shanklin Pier v Detel Products in support. A smaller number identified the Contracts (Rights of Third Parties) Act 1999, but where this was done, candidates often showed a sound awareness of its content. Other exceptions often identified included agency, representative actions and assignment. What was surprising was the frequent absence of negligence claims, the most important example of an exception to privity of contract. Where answers did include this topic, there was often a strong exposition of the essential ingredients for a successful claim (duty of care, breach of duty, consequent damage etc.). Sound use of supporting case law (including Donoghue v Stevenson) was frequently included. The main area not discussed was the limitations on a negligence claim if the only loss is financial. Q5 (a) Determine the collateral legal obligations that arise from the

tendering process

(15 Marks)

Q5 (b) Explain the essential legal differences between penalty clauses and liquidated damages clauses in a contract

(15 Marks)

Analysis of the Question This question required candidates to discuss the legal differences between penalty and liquidated damages and the collateral obligations that arise during a tendering process.

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Analysis of the Answer In part (a), a distinction between penalty clauses and liquidated damages clauses should have been made. Candidates should recognise that penalty clauses are illegal while a liquidated damages clause is valid and enforceable if it has been properly incorporated into the contract and satisfies the requirements of a liquidated damages clause. An answer should have attempted to define each type of clause. (Genuine pre-estimate of loss made at the time of the contract or a clause designed to terrorise the other party into performing the contract). Answers should have referred to some of criteria laid down in the case of Dunlop Pneumatic Tyre Co Ltd v Motor Co Ltd. These criteria should have included the clause will be a penalty clause if either the sum to be paid by way of compensation is extravagant by comparison to the actual loss suffered, or where the performance of the contract is the payment of a sum of money and the clause requires the payment of a larger sum of money on breach, or where the clause seeks to make the defendant pay the same amount of compensation irrespective of whether the breach is serious or trivial and it cannot be a pre-estimate of the actual loss suffered in both instances. A strong answer would also have discussed whether a party received an inducement to accept the clause and the contra proferentum rule. In part (b) the collateral obligations are those that arise from the tendering process irrespective of who the contract is eventually awarded to. A core answer should have discussed most of these obligations which may have included the duty to consider all complaint tenders, equal and timely access to information, equal treatment, duty of good faith and the obligation on the supplier to keep the bid open if this is so provided. Supporting case law like Blackpool Aero Club V Blackpool Borough Council or R V National Lottery Commission ex parte Camelot would enhance an answer. Exam Question Summary In terms of part (a), the majority of candidates were able to correctly define liquidated damages and penalties, and establish the fact that liquidated damages are enforceable whereas penalties are unenforceable in English law. Stronger answers explained how the difference can be established and referred to Dunlop v New Garage Ltd in support (often including the facts). Only a small number identified in detail the tests that this case established to distinguish the two concepts. A cause of some concern was where candidates clearly did not have knowledge of this topic. This was seen where candidates discussed penalties in terms of legitimate clauses in contracts, often distinguishing them from liquidated damages based on being used for different types of breach. Also, some candidates confused liquidated damages with unliquidated damages and devoted the answer to the judicial restrictions on claimable loss. Given the frequency that this topic has been found in past papers, this is surprising. Many answers also stated that such clauses are subject to the Unfair Contract Terms Act 1977 which is not the case. In terms of part (b), most answers demonstrated a sound knowledge of the collateral duties in tendering with clear explanations supported by suitable case law (Blackpool & Fylde Aero Club v Blackpool Council, Camelot v National Lottery Commission being the most frequently cited). The most significant error was in confusing the collateral duties (which are English common law in origin i.e. created by English judges to be applied to all tendering) with the

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European Union public procurement rules. As a result, references to advertising in OJEU, thresholds, debriefing and standstill periods were inappropriate. Q6 (a) Outline the main provisions of the TUPE Regulations 2006 (10 Marks)

Q6 (b) Distinguish between absolute and qualified exemptions under the Freedom of Information Act 2000

(15 Marks)

Analysis of the Question The first part of the question required candidates to distinguish between different types of exemption under the Freedom of Information Act 2000 and also provide an outline of the main provisions of the TUPE Regulations 2006. Analysis of the Answer In terms of part (a), an answer might have referred to the acquired rights directive and should include an explanation of what amounts to a relevant transfer (business transfer – stable economic entity). Strong answers should be able to refer to new provisions relating to a ‘service provision change’. An answer should have referred to the main protection offered by the Regulations which is continuity of employment and protection of existing terms and conditions. An answer might also refer to consultation rights of employees. Strong answers would consider the new rules especially those concerning the obligation on the transferor to provide certain information about the transferred staff to the transferee. In terms of part (b), both absolute and qualified exemptions should have been defined. Absolute exemptions could have included the eight categories of information covered by absolute exemptions include information accessible by other means (e.g. on an authorities’ website), information from state security bodies such as MI5, MI6 and GCHQ, court records, information covered by parliamentary privilege, information that could prejudice the effective conduct of public affairs, personal data and significantly for procurement - information provided in confidence under S41. The final absolute exemption is where disclosure is legally prohibited – e.g. Under the Human Rights Act 1998. Qualified exemptions could have included information that could prejudice the country’s defence, international relations, relations within the UK (This covers relations between the UK Government, the Scottish Parliament and the Welsh and Northern Irish Assemblies), the country’s economic interests, law enforcement, audit functions and commercial interests. Strong answers would have identified the two exemptions that are particularly relevant to procurement (S41 and or S43 exemptions). S43 applies to trade secrets and to information that could otherwise prejudice a company’s commercial interests. Strong answers did mention the public interest test and the possible key issue of timing in respect of confidential information Exam Question Summary In terms of part (a), candidates showed a significant improvement in their evident knowledge of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Many answers identified what constitutes a relevant transfer, almost always including outsourcing in this definition. The basic principles (continuity of employment, preservation of the same pay & conditions of employment) were clearly explained, with relevant procedures (provision of information, consultation) also suitably covered. The potential for

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unfair dismissal claims was identified with many candidates showing a basic awareness of ETO reasons which allow for redundancies/changes to pay & other conditions. Many candidates now appear aware of the need to provide pre-transfer information to the transferee. In terms of part (b), it was only a minority of candidates who demonstrated adequate knowledge of the Freedom of Information Act 2000. Given that 15 marks were involved and the question specifically focussed on the exemptions to the general duty to disclose, it was not a suitable question to attempt without suitable revision of this legislation. The stronger answers did provide a basic outline of the purpose behind the Act and its requirements on public authorities, and followed this with a comparison of the differences between absolute exemptions and qualified exemptions (e.g. the latter being subject to a public interest test). Stronger answers also provided suitable examples e.g. absolute exemptions include state security information, court records, Parliamentary privilege & information provided in confidence (the last found in section 41 of the Act); qualified privileges include law enforcement, audit functions & information that could be prejudicial to commercial interests (the last being found in section 43). General comments There is strong evidence that candidates are generally not sufficiently prepared for the examination. The lack of supporting case law was sometimes disappointing especially as there is a legal section in Supply Management every month which is electronically archived and available to every member. The lack of awareness and significance of S34 and S35 Sale of Goods Act was disappointing. Like previous papers, a number of candidates repeated the case study facts which results in wasted time and no marks. Candidates need to be aware that part of the revision should be to look at previous papers and reports. This should reduce the tendency for candidates to be unprepared on themes that have proved significant over time. APPENDIX: Syllabus matrix indicating the learning objectives of the syllabus unit content that each question is testing

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SYLLABUS MATRIX Nov-11 SAFETY-BY

Author M KEANE

TION B

Marks distribution by section

1 2 3 4 5 6

Learning Objective a b c a b c a b c a b c a b c a b c

1.1

75 1.2

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