CIPS L4m3 Commercial Contracting · Free Practice Question Easy
Question 14
Which of the following statements on framework agreement is correct?
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A
Framework agreements allow any suppliers and purchasers to enter and exit freely
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B
The contract awarded under a framework agreement shall use the terms set out in the framework
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C
Consideration is involved in every framework agreement
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D
Framework agreements have absolute no legal standing
Reveal correct answer
Correct answer: B
Explanation
According to Directive 2014/25/EU, "A framework agreement means an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged."
Though framework agreement has some legal standing (it binds the purchaser with selected supplier and selection mechanism), it is not a contract since it lacks the consideration. The framework agreement generally does not specifies price, quantity, delivery time. It sets out the terms and conditions which shall apply when contract is awarded to a supplier.
A true framework agreement is closed system, which means purchaser(s) can only contract with selected supplier(s).
The correct answer must be: "The contract awarded under a framework agreement shall use the terms set out in the framework"
Reference: CIPS study guide page 60-62
LO 1, AC 1.3
Discussion
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