Contract Documentation & Legal Considerations Flashcards
7 cards from real CEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contract Documentation & Legal Considerations flashcards as text
When a contract contains a 'pay-when-paid' clause in a subcontract, the general contractor:
Answer: May delay subcontractor payment until the GC receives payment from the owner for that work
A pay-when-paid clause conditions the GC's obligation to pay subcontractors on first receiving payment from the owner, though enforceability varies by state.
A 'mechanic's lien' filed on a construction project serves what primary purpose for unpaid contractors or suppliers?
Answer: Creates a security interest in the property to help ensure payment for labor and materials furnished
A mechanic's lien encumbers the property title, giving unpaid contractors and suppliers a legal claim against the real estate to secure payment.
In estimating for a cost-plus-fixed-fee (CPFF) contract, what cost risk does the contractor bear?
Answer: Minimal cost risk since the owner reimburses allowable costs plus a fixed fee
Under CPFF contracts, the owner bears the cost risk because the contractor is reimbursed for all allowable costs; the contractor's risk is limited primarily to scope of work and indirect cost allocation.
Which document formally incorporates all contract documents into a single legally binding agreement?
Answer: The agreement (e.g., AIA A101 or similar owner-contractor agreement)
The owner-contractor agreement (such as AIA A101) is the primary contract document that lists and incorporates all other contract documents by reference.
What is the significance of the 'date of commencement' in a construction contract?
Answer: It is the starting point from which the contract time is measured for calculating substantial completion
The date of commencement starts the clock on the contract duration, establishing the baseline from which substantial and final completion dates are calculated.
A 'termination for convenience' clause in a federal contract allows the government to:
Answer: End the contract at any time without cause and pay the contractor for work done plus reasonable profit on completed work
A termination for convenience allows the government to stop work without contractor fault, obligating payment for work completed plus allowable termination costs and profit.
Which type of contract delivery method combines design and construction into a single contract with one entity?
Answer: Design-build
Design-build contracts place both design and construction responsibilities under a single entity, creating a single point of responsibility for the owner.