NASCLA Contracts and Project Documentation

Question 1

Which element is NOT required to make a construction contract legally enforceable?

Accepted Answer

Notarization by a public notary

Answer

Offer and acceptance

Answer

Consideration

Answer

Legal capacity of the parties

Question 2

A 'change order' in a construction contract is best described as:

Accepted Answer

A written agreement modifying the original contract scope, cost, or schedule

Answer

A court order requiring changes to building plans

Answer

A subcontractor's request to change payment terms

Answer

An architect's directive that overrides the owner's wishes

Question 3

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

Accepted Answer

A predetermined amount of money paid for each day a project is delayed beyond the completion date

Answer

Damages awarded for liquid spills on a job site

Answer

Compensation for equipment that is damaged with liquids

Answer

Penalties assessed for substandard material quality

Question 4

Which type of contract 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 5

What is the purpose of a 'notice to proceed' in a construction contract?

Accepted Answer

It is the official written authorization from the owner for the contractor to begin work

Answer

It informs the contractor of building code violations

Answer

It notifies the public of upcoming construction

Answer

It is a lien filed before work begins

Question 6

An 'indemnification clause' in a construction contract requires one party to:

Accepted Answer

Indemnify (protect) the other party from certain losses or liabilities

Answer

Split all project costs equally

Answer

Provide free labor for warranty repairs

Answer

Maintain a separate escrow account for damages