Exam L4M3 Topic 7 Question 53 Discussion

Actual exam question for CIPS's L4M3 exam
Question #: 53
Topic #: 7

In which scenarios would it be appropriate for a procurement organisation to include contractual indexation and/or price adjustment formulae clauses in a services contract? Select TWO that apply.

A. The supplier's directors shall be paid dividends during the term B. The supplier's contract staffing costs will be subject to regulatory increase C. The material components were tendered as fixed costs for the term D. The supplier's preference is to switch to a more expensive material specification E. The market rates for the supplier's material costs will vary during the term

Suggested Answer: A,B,D,E Vote an answer

Indexation and price adjustment clauses are appropriate when future costs are uncertain or likely to change, such as regulatory-driven wage increases (B) or fluctuating material costs (E). These clauses allow adjustments based on objective indices while preserving the integrity of the contract.
Reference:CIPS L4M3 Commercial Contracting Study Guide, Chapter 4, Section 4.2.2 - Index-linked pricing and adjustments.

by Ivan at Oct 15, 2026, 03:39 AM

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