Contracts, Laws, and Agreements 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 Contracts, Laws, and Agreements flashcards as text
A general contractor is hired under a cost-plus contract with a guaranteed maximum price (GMP). If actual costs exceed the GMP, who bears the additional cost?
Answer: The contractor, since the GMP is the ceiling
In a GMP contract, the contractor absorbs any costs exceeding the guaranteed maximum price, protecting the owner from cost overruns.
What is 'promissory estoppel' in the context of subcontractor bid shopping?
Answer: A principle that makes a subcontractor's bid binding if the GC reasonably relied on it
Promissory estoppel can bind a subcontractor to its bid if the general contractor reasonably relied on that bid when submitting its own prime bid.
A liquidated damages clause in a construction contract must meet what legal requirement to be enforceable?
Answer: The amount must be a reasonable estimate of actual damages, not a penalty
Liquidated damages clauses are enforceable only if the amount is a genuine pre-estimate of probable damages, not an unenforceable penalty.
Under most state contractor licensing laws, which of the following acts is typically prohibited even if no harm results?
Answer: Contracting beyond the monetary limit of your license classification
Contracting for projects that exceed the monetary or scope limits of your license classification is a violation of licensing law regardless of project outcome.
What is the primary purpose of a 'no-damages-for-delay' clause in a construction contract?
Answer: To bar the contractor from recovering monetary compensation for owner-caused delays
A no-damages-for-delay clause attempts to limit the contractor's remedy for owner-caused delays to time extensions only, with no additional compensation.
When a construction contract requires disputes to go to arbitration, what is the main advantage for contractors?
Answer: It provides faster, private resolution without a jury trial
Arbitration typically resolves disputes faster and more privately than litigation, with decisions made by industry-knowledgeable arbitrators rather than juries.
A contractor performs extra work at the owner's verbal request but without a written change order. Under a contract requiring written change orders, can the contractor recover payment?
Answer: Possibly, under theories of waiver, estoppel, or quantum meruit depending on the state
While written change order requirements are strictly enforced in many states, courts sometimes allow recovery if the owner waived the requirement or under quantum meruit to prevent unjust enrichment.