QUESTION ONE

Read the following and answer the questions that follow:

Contract management can be defined as the activities of a buyer before, during and after a contract is signed, to ensure that all parties to the contract understand and fulfil their contractual obligations. Contracts may be for specific projects or for the supply of good or services over a period of time, typically between one to three years depending upon circumstances and objectives. Contract activities can be split into two distinct but interdependent phases: pre-contract award/renewal and post-contract management. Contract management is command and control of the activities spanning both phases, but the potential value adding outcomes of post contract management will not be realised unless effective pre-contract management has resulted in a contract that addresses all stakeholders needs with the utmost professional skill. A failure in pre-contract management will result in post-contract management time and effort being wasted on trying to resolve and correct omissions and failures of the earlier phase. INDEMNIFICATIONS Seller shall defend and shall indemnify and hold harmless Buyer, its successors, assigns, customers, and the users of its products, from all loss and damage including attorneys fees, by reason of any and all claims and suits charging injury or charging infringement of any patent, trademark or copyright arising out of the sale or use of any goods furnished hereunder except the Seller shall have no liability with respect to patent infringement for goods at to which Buyer furnishes complete specifications. Seller agrees to protect, defend, hold harmless and indemnify Buyer from and against any and all liability and expense resulting from any alleged or claimed defect in product, whether latent or patent, including allegedly improper construction and design, or from the failure of Product to comply with specifications or with any express or implied warranties of Seller or arising out of the alleged violation of any statute, ordinance, administrative order, rule or regulation connected with the manufacture of sale of Product, including but not limited to the Federal Occupational Safety and Health Act of 1970, as amended. Seller further agrees to obtain and maintain during the life of this agreement at its expense, product liability insurance, with a vendors endorsement, in such form and amount and in such company as may be approved by Buyer in writing. Satisfactory evidence of such insurance shall be submitted to Buyer upon request. For the purposes of this paragraph Product shall be deemed to include any packaging supplied by Seller.

Questions:

1.1 Examine the role of policy definition and conformance towards an effective purchasing function.

1.2. Discuss the potential situations in which purchasing professionals might be guilty of conflict of interest.

1.3. Explain the basic principles for awarding purchase contracts.