Chapter 14 – Purchasing Law and Ethics

The whole process of purchasing is controlled by many legal considerations, and these vary widely with location and circumstances. Is this:
1. true?
2. partly true?
3. false?
Agency laws deal with the role of buyers acting on behalf of their organisation. Is this:
1. true?
2. partly true?
3. false?
Who does an agent generally do work for?
1. a company
2. a principal
3. a manager
4. an employer
When a buyer works for a company, the company accepts responsibility for their actions, and they are never personally liable. Is this:
1. true?
2. partly true?
3. false?
The legal context for procurement is provided by:
1. commercial law
2. agency law
3. criminal law
4. consumer protection law
5. all of the above
What are, normally, the three key elements of a contract?
1. order, delivery and payment
2. offer, acceptance and consideration
3. inputs, operations and outputs
4. negotiation, agreement and execution
5. purchase, terms and schedules
Three other elements, generally assumed in contract law, are competent parties, mutual assent and legal subject matter. Is this:
1. true?
2. partly true?
3. false?
The three ways to cancel a contract are:
1. using agency law, contract law or consumer protection law
2. by default, for the convenience of the buyer and by mutual consent
3. by the buyer, by the supplier or by mutual agreement
4. by breach of contract, criminal action or breach of trust
5. by non-delivery, non-acceptance or non-payment
A breach of contract occurs when a buyer or seller fails to perform the obligations, described in their contract, without a valid or legal justification. Is this
1. true?
2. partly true?
3. false?
Damages are always awarded to a buyer when they fail to accept a delivery from a supplier. Is this:
1. true?
2. partly true?
3. false?
Despite the complexity of international laws, both buyers and sellers should expect some basic rights. Is this:
1. true?
2. partly true?
3. false?
What does CISG normally stand for?
1. ‘consensus is good’
2. conference on internal shipping of goods
3. choice in sourcing guide
4. contracts for the international sale of goods
5. contracting information systems guidelines
Warranties should always be written explicitly. Is this:
1. true?
2. not necessarily?
3. false?
Which of the following is least likely to be covered by intellectual property laws:
1. copyrights
2. patents
3. product specifications
4. trade secrets
5. insider trading
Ethics are the set of moral principles, or values, guiding our behaviour. Is this:
1. true?
2. partly true?
3. false?
Which of the following is not necessarily an unethical type of buyer behaviour?
1. personal buying
2. accepting supplier favours
3. financial conflict of interest
4. employing family members
5. reciprocity
Which of the following would not be described as a sharp practice by buyers?
1. gaining information unfairly
2. not compensating a supplier for design or other work
3. exaggerating problems
4. deliberate use of misinformation
5. taking unfair advantage of a supplier’s financial position
6. paying below market rates for products
Which of the following is not a common way of supporting ethical behaviour?
1. developing a code of ethics
2. top management commitment
3. continuous rotation of purchasing staff responsibilities
4. ethical training
5. closer buyer-seller relationships
As well as encouraging ethical behaviour, corporations are coming under increasing pressure to act in a socially responsible way. Is this:
1. true?
2. largely true?
3. false?