Certified Professional Public Buyer (CPPB) Practice Test

What type of defect may occur without visible signs, affecting a purchase?

1. Latent defect

2. Fraud

3. Contractual risk

4. Performance risk

The correct answer is: Latent defect

A latent defect is a hidden flaw that is not readily apparent upon inspection or use of the purchased item. This type of defect may exist in a product or asset without any visible signs, meaning that the buyer may be unaware of its existence at the time of the acquisition. For instance, in the purchasing of real estate, a latent defect could be an underlying structural issue that cannot be seen without extensive investigation, such as unseen water damage or faulty wiring within walls. Understanding that a latent defect can significantly affect the value and usability of a purchase is crucial for public buyers. It underscores the importance of due diligence, comprehensive inspections, and thorough evaluations before finalizing a purchase to mitigate unexpected liabilities and cost implications down the line. In contrast, the other terms refer to different concepts: fraud involves intentional deceit, contractual risk pertains to ambiguity or unfavorable terms in contracts, and performance risk relates to the possibility that a supplier may not fulfill their contractual obligations as expected. Each of these presents a different concern that, while important, does not specifically match the characteristics of hidden flaws inherent to latent defects.