CPC Contract Administration & Legal Issues 2 — Questions and Answers
Question 1: Under the AIA A201 General Conditions, which party is responsible for coordinating the work of separate contractors on the same project?
- The Owner (Correct answer)
- The Architect
- The General Contractor
- The Construction Manager
Correct answer: The Owner
AIA A201 places the responsibility for coordinating separate contractors on the Owner when multiple prime contracts are used.
Question 2: A contractor submits a claim for additional compensation 45 days after discovering a differing site condition. The contract requires notice within 21 days. The most likely legal outcome is:
- Full recovery because the condition was legitimately unforeseen
- Partial recovery based on actual damages proven
- Denial of the claim due to failure to provide timely notice (Correct answer)
- Recovery limited to direct costs only
Correct answer: Denial of the claim due to failure to provide timely notice
Failure to provide contractually required timely notice for a differing site condition claim typically results in waiver of the claim.
Question 3: The doctrine of 'substantial completion' is most important in construction contracts because it:
- Triggers the owner's obligation to make final payment
- Shifts risk of loss from the contractor to the owner and starts warranty periods (Correct answer)
- Allows the contractor to demobilize all equipment and personnel
- Requires the architect to issue a certificate of occupancy
Correct answer: Shifts risk of loss from the contractor to the owner and starts warranty periods
Substantial completion transfers risk of loss, begins warranty periods, and shifts from contractor's insurance obligation to owner's.
Question 4: Which type of bond guarantees that a contractor will pay subcontractors and suppliers for labor and materials used on the project?
- Performance bond
- Bid bond
- Payment bond (Correct answer)
- Maintenance bond
Correct answer: Payment bond
A payment bond (also called a labor and material payment bond) protects subcontractors and suppliers from nonpayment by the prime contractor.
Question 5: A 'no damage for delay' clause in a construction contract generally:
- Prohibits time extensions for owner-caused delays
- Limits contractor recovery to time extensions only, not monetary damages, for delays (Correct answer)
- Requires the contractor to accelerate work without additional compensation
- Makes the contractor liable for all project delays
Correct answer: Limits contractor recovery to time extensions only, not monetary damages, for delays
A no damage for delay clause bars monetary recovery for delays but typically still allows time extensions to the project schedule.
Question 6: Under the Miller Act, payment and performance bonds are required for federal construction contracts exceeding:
- $25,000
- $100,000
- $150,000 (Correct answer)
- $500,000
Correct answer: $150,000
The Miller Act requires both performance and payment bonds on federal construction contracts exceeding $150,000.
Question 7: When a contractor encounters underground utilities not shown on the contract drawings, this situation is best characterized as a:
- Force majeure event
- Type I differing site condition (Correct answer)
- Type II differing site condition
- Owner's risk under the spearin doctrine
Correct answer: Type I differing site condition
A Type I differing site condition is one that differs materially from what was indicated in the contract documents, such as unmarked utilities.
CPC Contract Administration & Legal Issues 2
Under the AIA A201 General Conditions, which party is responsible for coordinating the work of separate contractors on the same project?