Contract Documentation & Legal Considerations Flashcards

In contract law, what does 'substantial completion' legally trigger?

Answer: Transfer of risk and responsibility for the work from contractor to owner, and start of warranty periods

Substantial completion marks the point when the work is sufficiently complete for its intended use, transferring occupancy risk to the owner and starting warranty periods.

Which type of bond guarantees that a contractor will perform all work in accordance with the contract terms?

Answer: Performance bond

A performance bond guarantees the surety will complete the project or compensate the owner if the contractor defaults on contract obligations.

A 'spearin doctrine' defense protects a contractor when:

Answer: The owner-furnished specifications are defective, shifting design responsibility to the owner

Under the Spearin Doctrine, an owner impliedly warrants the adequacy of its plans and specifications, making the owner liable when defective specs cause contractor losses.

What is the primary function of a 'notice to proceed' (NTP) document?

Answer: Authorizes the contractor to begin work and establishes the official contract start date

A Notice to Proceed officially authorizes the contractor to mobilize and begin work, and it triggers the contract performance period start date.

Under the Federal Acquisition Regulations (FAR), what is a 'constructive change'?

Answer: An informal directive or action by the government that changes contract work without a formal change order

A constructive change occurs when government actions—such as defective specs, over-inspection, or wrongful rejection—effectively change the work without issuing a formal change order.

An estimator reviewing a 'flow-down' clause in a subcontract should understand that it:

Answer: Incorporates prime contract terms into the subcontract, binding the sub to the same obligations

Flow-down clauses pass the relevant obligations of the prime contract down to subcontractors, ensuring consistent terms throughout the contracting chain.

What does 'retainage' in a construction contract primarily protect?

Answer: The owner's financial security ensuring contractor completes all punch list and warranty obligations

Retainage is a percentage of progress payments withheld by the owner to ensure the contractor completes the work and corrects deficiencies before final payment.