General Contractor License Contracts, Laws, and Agreements Questions and Answers

Question 1

A general contractor includes a clause in a subcontract stating that the subcontractor will only be paid after the general contractor receives payment from the property owner.
If the owner never pays, the contractor is not obligated to pay the subcontractor.
What is this type of clause called?

Accepted Answer

Pay-If-Paid Clause

Answer

Pay-When-Paid Clause

Answer

Contingent Payment Clause

Answer

Net Payment Agreement

Question 2

A subcontractor fails to pay a supplier for materials used on a residential project. To secure payment, the supplier files a legal claim against the property itself. This action, which can 'cloud' the property's title and prevent its sale or refinancing until the debt is settled, is known as a:

Accepted Answer

Mechanic's Lien

Answer

Stop Notice

Answer

Writ of Attachment

Answer

Payment Bond Claim

Question 3

A dispute arises between a general contractor and a property owner over the quality of finished work on a large commercial project. The contract specifies that disputes will be settled out of court by a neutral third party who will render a binding decision. Which dispute resolution method does this describe?

Accepted Answer

Arbitration

Answer

Litigation

Answer

Mediation

Answer

Negotiation

Question 4

Which of the following is an example of an implied warranty in a construction contract?

Accepted Answer

The assumption that the work will be performed with skill and competence, free from major defects.

Answer

A clause stating the roof will be free from leaks for ten years.

Answer

A provision specifying the use of a particular brand of windows.

Answer

A statement in the project manual guaranteeing the HVAC system's performance metrics.

Question 5

A general contractor signs a contract that includes a provision requiring them to cover all losses, damages, and legal fees incurred by the property owner, even if a claim arises from the owner's own negligence. This type of provision is best described as a(n):

Accepted Answer

Broad Form Indemnification Clause

Answer

Limited Form Indemnification Clause

Answer

Exculpatory Clause

Answer

Waiver of Subrogation

Question 6

In many states, before a construction project begins, a legal document is filed with the county recorder to officially signal the start date of the project. This document protects the owner by defining the start time for mechanic's lien rights and identifying key stakeholders. What is this document called?

Accepted Answer

Notice of Commencement

Answer

Building Permit

Answer

Notice of Completion

Answer

Certificate of Occupancy

A general contractor includes a clause in a subcontract stating that the subcontractor will only be paid after the general contractor receives payment from the property owner.If the owner never pays, the contractor is not obligated to pay the subcontractor.What is this type of clause called?

A general contractor includes a clause in a subcontract stating that the subcontractor will only be paid after the general contractor receives payment from the property owner.
If the owner never pays, the contractor is not obligated to pay the subcontractor.
What is this type of clause called?