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Ethics & Legal Compliance in Purchasing Flashcards

7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A buyer who signs a purchase order beyond the dollar limit in their delegation of authority, while the supplier reasonably believes the buyer can bind the company, has most likely created a contract based on what?

    Answer: Apparent authority

    Apparent authority arises when the principal's conduct leads a third party to reasonably believe the agent has authority, even beyond internal limits.

  2. Under UCC Article 2, a contract for the sale of goods priced at $500 or more generally must be:

    Answer: Evidenced by a writing signed by the party against whom enforcement is sought

    The UCC statute of frauds (§2-201) requires a signed writing for sales of goods of $500 or more, with some exceptions.

  3. A supplier offers to buy from your company only if your company also buys from them. This practice is called:

    Answer: Reciprocity

    Reciprocity is a mutual-purchase arrangement that ethics codes discourage because it undermines merit-based supplier selection.

  4. Which federal law prohibits U.S. companies from paying foreign government officials to obtain or retain business?

    Answer: Foreign Corrupt Practices Act

    The FCPA's anti-bribery provisions bar payments to foreign officials to win or keep business.

  5. A buyer shares one bidder's pricing with another bidder so they can undercut it. This unethical practice is known as:

    Answer: Bid shopping

    Bid shopping means disclosing competitors' confidential bids to get a lower price, which breaches confidentiality and fair dealing.

  6. Under the Robinson-Patman Act, which party can also be held liable for illegal price discrimination?

    Answer: A buyer who knowingly induces or receives a discriminatory price

    Section 2(f) makes it unlawful for a buyer to knowingly induce or receive a prohibited discriminatory price.

  7. A procurement manager's spouse owns stock in a company bidding on a contract the manager evaluates. The best ethical action is to:

    Answer: Disclose the interest and recuse from the evaluation

    Ethics codes require disclosing conflicts of interest and stepping away from decisions they could affect.