Deck 3: The Legal Aspects of Purchasing

Question 1

The purchasing manager administers the purchasing function. The purchasing function consists of many tasks within the business entity, including supporting the company with the required:

A) materials
B) supplies
C) services
D) all the above
E) "A" and "B" only

Answer 1

D

Question 2

The _____ is an excellent way for the buying firm to test the market without making a legal commitment to purchase.

A) PDQ
B) RDA
C) RFQ
D) RFC
E) RFA

Answer 2

C

Question 3

The three types of purchasing authority are ________ authority, ________ authority, and __________ authority.

A) granted / line / functional
B) implied / staff / emergency
C) line / staff / implied
D) express / implied / emergency
E) functional / staff / emergency

Answer 3

D

Question 4

The title purchasing agent is a ____________ term.

A) general
B) specific
C) all inclusive
D) generic legal
E) specific legal

Question 5

counteroffer is __________ if it contains the components that institute an offer.

A) good
B) to be considered
C) to be accepted
D) legally binding
E) agreeable

Question 6

When the seller makes an agreement to allow the buyer a specific time limit to make the purchase, _____________ will pass from the offeree to the offeror in return for a firm commitment.

A) full commitment
B) trust
C) services
D) accountability
E) consideration

Question 7

Purchasing agents receive numerous offers on a daily basis and must be able to identify complete legitimate offers. The three necessary components of an offer are:

A) Intent to make an offer / Communication of the offer intent / Identification of the specific subject matter
B) Desire to make an offer / Submission of a proposal / Identification of the product
C) Intent to make an offer / Submission of an idea / Identification of the specific product
D) Intent to make an offer / Communication of a price for the product / Identification of the product
E) Desire to make an offer / Communication of the price and quantity / Identification of the matter
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Power Point Slide 12

Question 8

In most instances, the purchasing official initiates an invitation to do business. The purchasing official issues a _____________.

A) request for quotation
B) requisition
C) purchase order
D) work order
E) contract

Question 9

rom a legal standpoint, the term purchasing agent accurately defines the individual who deals with a third party for a principal. From a legal point of view, the following factors are associated with the appointment with one exception. And that exception is:

A) The purchasing manager must be granted the authority to make purchase contracts.
B) The purchasing manager accepts the contracting authority.
C) The employer accepts the commitments that were made to the purchasing manager
D) The purchasing manager accepts the appropriate compensation for the position.

Question 10

Quotations as a result of this RFQ are enforceable. It must be made clear to the ________ that any _______ that submits an offer without this guarantee will not be considered.

A) buyer / vendor
B) vendor / buyer
C) supplier / supplier
D) supplier / buyer
E) principal / principal

Question 11

Under the U.S. Commercial Code, an agreement is a legal transaction that requires all of the following components with one exception. Which one is not required?

A) The subject of the matter must be legal and valid.
B) The parties must all reside in the same state
C) There must be mutual consideration.
D) The parties must be capable. .
E) The parties must reach an agreement by offer and acceptance.

Question 12

The ____ lacks the ______ component. When the _______ component is missing, the document is merely an invitation to bid.

A) PDQ / intent / intent
B) RFQ / extent / extent
C) RFQ / intent / intent
D) RQC / offer / offer
E) RQC / extent / extent

Question 13

The absence of ______ of the components mentioned in the previous question results in an unenforceable agreement in a court of law.

A) all
B) two
C) any
D) three

Question 14

The _______ question should be raised when quotations are requested. This approach gives the supplier equal opportunity to consider the risks before quoting.

A) firm price
B) delivery terms
C) quality
D) firm offer
E) just-in-time

Question 15

supplier secures a bonding company to guarantee that the supplier will enter into a contract if they are awarded the contract. A ____ bond enlists a ______ party into the transaction.

A) government / second
B) municipal / third
C) savings / governmental
D) bid / another
E) bid / third

Question 16

Purchasing personnel routinely sign purchase orders and contracts committing the company to the specific terms and conditions of purchase orders and contracts. The purchasing official has no personal liability providing that the following requirements are met with one exception. That one exception is:

A) The name of the principal or company is shown on the document.
B) The purchasing agent has a personal liability bond.
C) The agency relation is shown on the document.
D) All parties involved know that the purchasing agent is acting on behalf of the company or principal.
E) The purchasing agent is acting within the scope of his or her authority for the transaction.

Question 17

In case the supplier is unwilling to give the buying firm a __________, the purchasing professional should attempt to offer the seller (a) n ________ contract.

A) reasonable price / tentative
B) firm offer / binding
C) favorable offer / sweetheart
D) firm offer / option
E) favorable offer / option

Question 18

The most important task that the purchasing officer is involved in is representing the ________ in the development and negotiation of contracts with __________.

A) manufacturer / second parties
B) principal / second parties
C) principal / third parties
D) first party / second parties
E) first party / third parties

Question 19

The ____________ between the buyer and the seller usually leads to many offers and counteroffers.

A) discussions
B) negotiations process s
C) relationships
D) dialogue
E) contract

Question 20

The purchasing manager is (a) n ___________ for the firm.

A) agent
B) title
C) responsible position
D) expert
E) executive officer

Question 21

_____ bond condition is usually motivated by a federal or state regulation. Bonding is used to protect governmental agencies from unqualified bidders.

A) governmental
B) bid
C) municipal
D) AAA
E) savings

Question 22

Many businesses consider the cryptographic signature method known as _________________________ as the most secure and reliable method of signing contracts online.

A) Communications Information Analysis (CIA)
B) Public Key Infrastructure (PKI)
C) Public Knowledge Resources (PKR)
D) Public Key Information (PKI)
E) Random Information Modeling (RIM)

Question 23

ryptography is the science of securing information. The technology is based on scrambling information and then unscrambling it.

Question 24

Leasing is becoming more attractive for both consumers and businesses. Consumers are leasing automobiles in record numbers. One reason for the increase in consumer leasing is the __________ of the leased automobile for small businesses.

A) low rates
B) discounted rates
C) status
D) tax rebates
E) tax effect

Question 25

The courts are silent on enforcing oral contracts that exceed ______ .

A) $100
B) $400
C) $500
D) $800
E) $1,000

Question 26

The law [Electronic Signatures in Global and National Commerce Act (ESGICA)] will allow businesses to satisfy their obligation to provide legally required notices to buyers and sellers by sending notices electronically, once respondents provide consent for such online communication.

Question 27

To be eligible to participate in some federal programs, a company must be certified as at least one of the following:
Women-owned business
Minority-owned business

Question 28

n FOB shipment, means ___________ at a named place.

A) freight on board
B) FedEx on board
C) freight on bill
D) free on board
E) free on border

Question 29

In 1996 the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on Electronic Commerce, which offers member states of the United Nations methods to address barriers to the use of electronic communications in their ______________.

A) commercial law
B) common law
C) commercial regulations
D) common policies
E) competitive laws

Question 30

________ signature should be such that it can be used to identify the signer. This does not mean that the signature itself must consist of or include the _________ name.

A) commercial / company's
B) guaranteed / guarantor's
C) secure / guarantor's
D) secure / signer's
E) commercial / signer's

Question 31

The _______ has infiltrated every aspect of the world. ________ has outpaced the postal system as the primary communication mode in the developed world.

A) cell phone / Texting
B) Internet / E-mail
C) Intranet / E-mail
D) Internet / Voice-mail
E) cell phone / Voice-mail

Question 32

The transportation between the buying and selling firm is usually considered as part of the price. The __________ terms formalize the responsibilities of the buying and selling firm for delivery of the goods.

A) contract
B) formal
C) delivery
D) shipping
E) receiving

Question 33

The price is determined when the offer is accepted. In some cases, price __________ clauses are used in a contract.

A) elevator
B) escalation
C) stabilization
D) fixing
E) calculating

Question 34

Purchasing agents who violate ethical codes could easily ___________ .

A) be reprimanded
B) be taken to court
C) loose their jobs
D) loose the respect of their peers
E) go to jail

Question 35

The federal Electronic Signatures in Global and National Commerce Act (ESGICA), or E-Sign, went into effect on October 1, 2000. The law made online contracts for a variety of business transactions more ________________.

A) clearly enforceable
B) consistent
C) easily understood
D) legally binding
E) lengthy

Question 36

Oral contracts occur everyday. However, oral contracts have no place in the professional purchasing arena. If a supplier refuses to perform, there is ______________ for the buyer.

A) limited recourse
B) no recourse
C) legal recourse
D) small claims court
E) professional help

Question 37

In society, some people are respected based on the amount of money they have, regardless of the money's sources and methods of obtaining it. However, in business environments, ethical behavior is the foundation of ______.

A) trust
B) goodwill
C) long term relationships
D) good customer service
E) a good reputation

Question 38

commercial signature must be linked to the data message being signed, in such a manner that if the message is changed the signature is invalidated. Such a linkage may be regarded as a crucial requirement for a commercial signature, since otherwise the signature could be simply excised from one data message and pasted onto another.

Question 39

price _________ clause is an adjustment that the seller utilizes in order to compensate for variances at delivery.

A) elevator
B) calculating
C) stabilization
D) escalation
E) determination

Question 40

Government contractors, under certain conditions must award subcontracts to ________________ bidders.

A) the low cost
B) the preferred
C) women and minority
D) the advanced
E) female