Contracting and Vendor Management Flashcards

An association hires a contractor classified as an independent contractor, but later it is determined the relationship meets the legal test for employment. What is the PRIMARY risk to the association?

Answer: The association may owe back payroll taxes and benefits

Misclassifying an employee as an independent contractor exposes the association to liability for unpaid payroll taxes, workers' compensation, and benefits.

Which best practice should a manager follow when managing multiple active vendor contracts simultaneously?

Answer: Maintain a contract management calendar tracking key dates and renewal deadlines

A contract management calendar prevents missed renewal windows, expirations, and compliance deadlines across multiple active agreements.

A vendor performing electrical work on common areas does not carry the required general liability insurance. The manager discovers this mid-project. What should the manager do FIRST?

Answer: Stop work immediately and require proof of current insurance before resuming

Allowing uninsured work to continue exposes the association to unprotected liability; work must stop until the vendor provides proof of required coverage.

When evaluating vendor bids for a major common-area renovation, the board should PRIMARILY consider:

Answer: Price, qualifications, references, scope compliance, and insurance coverage

A thorough vendor selection weighs multiple factors including price, demonstrated qualifications, references, scope compliance, and adequate insurance.

A service contract's payment terms specify 'net 30.' The association pays the invoice 45 days after receipt. What is the likely consequence?

Answer: The vendor may charge late fees as specified in the contract

Most service contracts include late payment penalties; paying beyond net-30 terms triggers any late fees or interest specified in the agreement.

Which type of contract is MOST appropriate when the full scope of maintenance work cannot be precisely defined in advance?

Answer: Time-and-materials contract

A time-and-materials contract is suited for work with an undefined scope because it compensates the vendor for actual labor hours and materials used.

A board member suggests awarding a painting contract to a relative's business without a competitive bid process. The manager should advise the board that this creates a:

Answer: Conflict of interest that must be disclosed and managed per the association's policy

Awarding contracts to related parties constitutes a conflict of interest that must be disclosed and handled according to the association's conflict-of-interest policy.