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Contract Law and Dispute Resolution Flashcards

6 cards from real CSLB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Contract Law and Dispute Resolution flashcards as text

  1. What is the primary function of a 'stop payment notice' in California construction law?

    Answer: Requires the owner or lender to withhold funds from the contractor to satisfy unpaid claims

    A stop payment notice (formerly stop notice) compels the project owner or construction lender to withhold undisbursed funds to satisfy unpaid subcontractor or supplier claims.

  2. California's statute of limitations for latent construction defects is generally:

    Answer: 10 years from substantial completion

    California Code of Civil Procedure §337.15 imposes a 10-year statute of repose for latent construction defects, running from the date of substantial completion.

  3. Which alternative dispute resolution method results in a binding decision made by a neutral third party without going to court?

    Answer: Arbitration

    Arbitration results in a binding award issued by a neutral arbitrator, which is enforceable in court, unlike mediation which is non-binding.

  4. A 'no damages for delay' clause in a construction contract generally:

    Answer: Bars the contractor from recovering monetary compensation for owner-caused delays

    A 'no damages for delay' clause limits the contractor's remedy for owner-caused delays to time extensions only, barring recovery of additional costs or lost profits.

  5. Under California law, construction contracts for public works projects must include a provision for:

    Answer: A dispute resolution process before litigation

    California Public Contract Code requires public works contracts to include a claim dispute resolution process that provides a structured pre-litigation mechanism for resolving contractor claims.

  6. What is the purpose of a 'performance bond' on a California construction project?

    Answer: Ensures the surety will complete the project or pay damages if the contractor defaults

    A performance bond provides the project owner with financial assurance that if the contractor defaults, the surety will step in to complete the project or reimburse the owner for losses.