Business Law and Finance Flashcards
7 cards from real General Contractor License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Law and Finance flashcards as text
A contractor working as a sole proprietor is personally sued for a project dispute. What is their exposure?
Answer: Unlimited — all personal assets can be at risk
Sole proprietors have no legal separation between personal and business assets, so all personal property can be reached by business creditors.
What is a 'lien waiver' and when is it typically used?
Answer: A document waiving the right to file a mechanics lien, exchanged upon payment
A lien waiver is a document where a contractor or supplier relinquishes their right to file a mechanics lien upon receiving payment.
Which of the following best describes 'accounts receivable' on a contractor's balance sheet?
Answer: Money owed to the contractor for completed work not yet paid
Accounts receivable represents amounts billed to clients for work performed but not yet collected.
An owner terminates a contract 'for convenience' without cause. What is the contractor typically entitled to?
Answer: Payment for work done, costs incurred, and lost profit on unperformed work
A for-convenience termination clause entitles the contractor to payment for completed work, committed costs, and anticipated profit on the remaining scope.
A contractor fails to pay payroll taxes withheld from employees. The IRS can assess the 'Trust Fund Recovery Penalty' against:
Answer: Responsible individuals personally, even if the business is incorporated
The Trust Fund Recovery Penalty allows the IRS to hold responsible individuals personally liable for unremitted payroll taxes, piercing corporate protection.
What is the legal effect of an 'acceleration clause' in a construction loan?
Answer: It permits the lender to demand full repayment immediately upon default
An acceleration clause gives the lender the right to declare the entire loan balance due immediately if the borrower defaults on any loan term.
Under OSHA regulations, which of the following is a contractor's general duty regarding workplace safety?
Answer: Contractors must provide a workplace free from recognized hazards likely to cause serious harm
OSHA's General Duty Clause requires all employers to provide a workplace free from recognized serious hazards, regardless of company size.