Licensed Electrical Contractor Business and Law Principles 2

Question 1

Under the Davis-Bacon Act, which contractors are required to pay prevailing wages to workers?

Accepted Answer

Contractors on federally funded construction projects over $2,000

Answer

All private commercial contractors

Answer

Contractors with more than 50 employees

Answer

Contractors working on projects exceeding $100,000

Question 2

A contractor discovers mid-project that completing the work as specified will require substantially more materials than estimated. The BEST course of action is to:

Accepted Answer

Issue a formal change order documenting the additional scope and cost

Answer

Complete the work at a loss to maintain the client relationship

Answer

Stop work immediately until the client pays more

Answer

Use cheaper substitute materials without notifying the client

Question 3

What is the primary purpose of workers' compensation insurance for an electrical contracting business?

Accepted Answer

To cover medical costs and lost wages for employees injured on the job

Answer

To protect the business from customer lawsuits

Answer

To replace damaged tools and equipment

Answer

To provide retirement benefits for long-term employees

Question 4

An electrical contractor operating as a sole proprietor faces which significant financial risk compared to a corporation?

Accepted Answer

Unlimited personal liability for business debts and lawsuits

Answer

Higher federal income tax rates

Answer

Inability to hire employees

Answer

Requirement to pay double Social Security taxes

Question 5

Which contract type places the MOST financial risk on the contractor?

Accepted Answer

Fixed-price (lump sum) contract

Answer

Cost-plus contract

Answer

Time and materials contract

Answer

Unit price contract

Question 6

What does the term 'liquidated damages' refer to in a construction contract?

Accepted Answer

A pre-agreed daily penalty amount the contractor pays for project delays

Answer

Compensation for water-damaged materials on a job site

Answer

The cost to liquidate a bankrupt contractor's assets

Answer

Insurance proceeds paid after a covered loss

Question 7

A subcontractor on a commercial project has not been paid by the general contractor. Which legal remedy is most commonly available to protect the subcontractor's right to payment?

Accepted Answer

Filing a mechanic's lien against the property

Answer

Filing a criminal complaint against the general contractor

Answer

Suing the property owner's insurance company directly

Answer

Contacting the state labor board for wage theft