Business and Law Principles Flashcards
7 cards from real Licensed Electrical Contractor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business and Law Principles flashcards as text
Under the Davis-Bacon Act, which contractors are required to pay prevailing wages to workers?
Answer: Contractors on federally funded construction projects over $2,000
The Davis-Bacon Act requires contractors on federally funded or assisted construction projects over $2,000 to pay workers locally prevailing wages and benefits.
A contractor discovers mid-project that completing the work as specified will require substantially more materials than estimated. The BEST course of action is to:
Answer: Issue a formal change order documenting the additional scope and cost
A formal change order protects both parties by documenting changes to scope, cost, and timeline before additional work proceeds.
What is the primary purpose of workers' compensation insurance for an electrical contracting business?
Answer: To cover medical costs and lost wages for employees injured on the job
Workers' compensation insurance covers employees' medical expenses and a portion of lost wages when they suffer work-related injuries or illnesses.
An electrical contractor operating as a sole proprietor faces which significant financial risk compared to a corporation?
Answer: Unlimited personal liability for business debts and lawsuits
As a sole proprietor, the owner's personal assets are not protected from business liabilities, unlike a corporation where liability is generally limited to business assets.
Which contract type places the MOST financial risk on the contractor?
Answer: Fixed-price (lump sum) contract
A fixed-price contract requires the contractor to complete the work for the agreed sum regardless of actual costs, placing the risk of cost overruns entirely on the contractor.
What does the term 'liquidated damages' refer to in a construction contract?
Answer: A pre-agreed daily penalty amount the contractor pays for project delays
Liquidated damages are a pre-agreed amount specified in the contract that the contractor must pay the owner for each day a project is delayed beyond the completion date.
A subcontractor on a commercial project has not been paid by the general contractor. Which legal remedy is most commonly available to protect the subcontractor's right to payment?
Answer: Filing a mechanic's lien against the property
A mechanic's lien (also called a construction lien) allows unpaid subcontractors and suppliers to place a legal claim against the property to secure payment.