Contracts and Project Documentation Flashcards

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

Answer: Notarization by a public notary

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

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

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

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.

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

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

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.

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

Answer: Fixed-price (lump sum) contract

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.

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

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

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.

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

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

An indemnification clause is a contractual promise by one party to compensate the other for specified losses, claims, or damages arising from the project.