Arthur is a farmer who owns a herd of beef cattle. Arthur sells his cattle directly to local butchers.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [1] Primary
2. [4] Arthur will use road transport/truck (1) over short distances (1) to send his cattle to the local butchers (1) to other areas/e.g. market/auction house/taking infested cattle away for treatment (1) In order to meet the butchers (1) e.g. discuss prices (1) He will also have deliveries of supplies (1) e.g. medicines/cattle feed (1) and equipment (1) He could use transport to get around the farm (1) and to transport his workers (1) He could use rail transport (1) for longer distances (1) To advertise (1) logo/on side of vehicle (1) He could use sea transport (1) for the import of machinery (1) to export cattle (1) To deposit his takings (1) at the bank (1) Without transport Arthur would have not be able to herd his cattle to the butchers (1)
3. [4] Fire (1) damage or destruction to his buildings or machinery (1) Theft (1) of his machinery (1) Consequential loss (1) cover against losses to his business' income caused by fire or theft (1) Premises/Buildings insurance (1) cover against the risk of floods/wind/earthquake/damage caused accidentally by third parties (1) Employer's liability (1) to cover risk of accident to workers (1) Motor vehicle (1) comprehensive/third party (1) Public liability (1) covers negligence to customers (1)
4. [3] Utmost good faith means that both parties (1) must tell the truth (1) and give all the relevant facts (1). Allow example such as, if Arthur did not disclose the remoteness of the farm in his insurance proposal (1) This helps the insurance company to set a premium (1) and withholding information will affect the premium paid (1) and might make the policy null and void (1) with no compensation paid (1)
5. [2] Provides written evidence/proof of the contract/insurance Gives terms and conditions of the policy/type of policy Shows the amount of cover provided Shows the risks insured against Shows the premium to be paid Shows the period of cover Shows the renewal date Procedure for effecting a claim/able to claim if any risk occurs
6. [6] Level 2 (4-6 marks) Has discussed whether or not Arthur should sell to the supermarket chain and given reasoning Level 1 (1-3 marks) Has commented on the statement If a candidate has presented a one-sided argument, award 4 marks max. Advantages of selling to the supermarket chain rather than to small local butchers: Fixed price so that Arthur can plan his income more easily. If the chain is well established then payment should be certain. Delivery will be to one destination. Arthur knows that he can sell all his cattle. Guaranteed market for three years. Disadvantages of selling to the supermarket chain rather than to small local butchers: The contract is at a lower price, which will mean less income for Arthur. The local butchers may go out of business faced with supermarket competition and a lack of supply. This could make Arthur unpopular in the community. It could also mean that, when it is time to renew the contact, there is no alternative to the supermarket chain, who will then be able to dictate lower prices. Prices cannot be altered to allow for any new external factor. Decision: The steady contract with the supermarket is attractive but may have negative long term implications. Arthur would like the goodwill of the local community. One solution would be to enter into a contract with the supermarket for say 50% of his cattle and retain the other 50% for the local butchers.