Exam L4M3 Topic 4 Question 31 Discussion

Actual exam question for CIPS's L4M3 exam
Question #: 31
Topic #: 4
A procurement professional is drafting payment terms for a commercial contract. He is considering about payment method if defective products are found. Which of the following should be embedded in payment terms to control this issue?

Suggested Answer: D Vote an answer

Retention money is the payment for a service or product that is withheld pending the completion of some specified condition. For example, buyer may withhold the amount due until the supplier replace all defective goods.
Pay-less notice is the notice under a contract which states that the invoice will only be partially paid because of some issues such as supplier has to pay the damages.
Remedies for late payment are remedies that supplier may seek when a buyer pay it later than the stated payment terms. Normally, the buyer will be charged an interest rate.
Reference: CIPS study guide page 190-191
LO 3, AC 3.3

by Joanne at Jul 17, 2025, 11:26 AM

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