NASCLA Contracts and Project Documentation 1

Question 1

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

Accepted Answer

Notarization by a public notary

Answer

Notarization is generally not required for construction contracts to be legally enforceable; the key elements are offer, acceptance, consideration, and legal capacity.

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 change order is a written document signed by the owner and contractor that modifies the original contract's scope of work, price, or completion date.

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

Liquidated damages are a pre-agreed daily penalty specified in the contract that the contractor must pay for each day the project extends beyond the agreed completion date.

Question 4

Which type of contract places the most financial risk on the contractor?

Accepted Answer

Fixed-price (lump sum) contract

Answer

A fixed-price contract places the most risk on the contractor because they must complete the work for the agreed price regardless of actual costs incurred.

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

A notice to proceed is a formal written document from the owner authorizing the contractor to begin work and typically establishing the official project start date.

NASCLA - National Association of State Contractors Licensing Agencies Practice Test

NASCLA - National Association of State Contractors Licensing Agencies Practice Test

NASCLA Contracts and Project Documentation 1