CPC Contract Administration & Legal Issues 3

Question 1

The Spearin Doctrine holds that when an owner provides design specifications, the owner implicitly warrants that:

Accepted Answer

Following the specifications will produce a satisfactory result

Answer

The Spearin Doctrine (U.S. v. Spearin, 1918) establishes that owners impliedly warrant that if a contractor follows provided specifications, the result will be fit for its intended purpose.

Question 2

In construction contract law, 'liquidated damages' are distinguished from penalties because they must be:

Accepted Answer

A reasonable pre-estimate of actual damages at the time of contracting

Answer

Liquidated damages are enforceable only when they represent a reasonable forecast of actual harm at contract formation, not a penalty for breach.

Question 3

A subcontractor's 'pay-when-paid' clause differs from a 'pay-if-paid' clause in that pay-when-paid:

Accepted Answer

Creates only a timing mechanism, not a condition that eliminates the payment obligation

Answer

Pay-when-paid clauses delay payment timing but do not eliminate the GC's obligation to pay the sub; pay-if-paid clauses can eliminate the obligation entirely.

Question 4

Which legal remedy allows a subcontractor to file a claim against the owner's property when the prime contractor fails to pay?

Accepted Answer

Mechanic's lien

Answer

Mechanic's liens (also called construction liens or materialmen's liens) give unpaid subcontractors and suppliers a security interest in the improved property.

Question 5

During contract performance, the contractor discovers that following the owner-supplied design specifications will result in a code violation. The contractor's best course of action is to:

Accepted Answer

Notify the owner and architect in writing and request clarification before proceeding

Answer

Contractors must promptly notify the owner and architect of code conflicts in the specifications and seek written direction rather than proceeding or unilaterally substituting.

(CPC) Certified Professional Constructor Practice Test

(CPC) Certified Professional Constructor Practice Test

CPC Contract Administration & Legal Issues 3