CM 4211 Final Exam - Schneider
"F.O.B." means freight overboard.
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A 48-hour clause gives a contractor the right to terminate a subcontract after giving 48 hour written notice to the subcontractor.
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A Louisiana requirement for a contract is parties legally incapable of contracting.
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A conventional joint venture requires all of its joint venturers to be licensed contractors if the venture is for a construction project, even if one of the joint venturers is only a "money man".
F
A foreign corporation is always one formed in another country.
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A limited waiver of immunity is an important clause in any private construction contract.
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A long-term contract is one that takes more than one year to perform.
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A prime contract is any contract in which one of the parties is a construction contractor.
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A proprietorship may use any name it wants without restriction.
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A purchase order is usually a first-tier contract.
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A subcontractor controls how and when the work is done.
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An "LLC" stands for limited liability corporation.
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An "escalation" clause may be included in a short-term lump sum contract.
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An S corporation is taxed at corporate tax levels.
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An income statement shows the nature and amount of a company's income at a particular point in time.
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Consideration is always measured in money.
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Fast-track services work especially well in the traditional approach.
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If Physical Conditions Reports are included in the bid documents, they can always be relied on by the contractor even if there is a disclaimer made by the owner.
F
If an owner contracts with an A/E for design services, the A/E is the owner's agent in that contract.
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In a partnership dissolution, a commercial lender gets paid after a partner lender.
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In a prime construction contract, a bank will be the source of funding for the project.
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In general, Louisiana partnership agreements have to be in writing.
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Joint venture participation percentages are based on the number of members in the venture.
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LLC's are always taxed like a partnership.
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Most contract breaches are intentional.
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The bid form itself is drafted and completed by the owner.
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The changes clause usually does not give the owner the unilateral right to make changes to the contract.
F
The contractor should wait until it is awarded the contract to evaluate all of the contract provisions.
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The cost of materials stored onsite, but not yet incorporated into the project, will be owed by the owner to the contractor even when there is no provision in the contract documents to do so.
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The frequency of progress payments will be found in the General Conditions.
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The main advantage to an owner of using a cost-plus-percentage fee is the incentive for the contractor to hold down construction costs.
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The manager of a joint venture is always the member with the larges participation percentage.
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The traditional approach is for the owner to have one contract with a design-build company rather than a contract with a designer and a contract with a builder.
F
"F.O.B. material supplier" means that the sale is complete at the material supply house and the construction contractor is liable for damage during transportation to the job site.
T
A "capital call" is when the working capital of a joint venture is exhausted and additional money is needed.
T
A "no-damages-for-delay" clause will still entitle the contractor to a time extension.
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A "set-aside" is work to be done by a disadvantaged business enterprise.
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A "variation-in-quantities" clause may be included in a unit-price contract.
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A Louisiana requirement for a contract is a certain object.
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A construction manager may contract with an owner as the owner's agent, and then may convert into an at-risk construction manager during construction.
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A contractor can still be assessed damages for missing milestone completion dates even if the contractor finishes the entire contract timely.
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A corporate shareholder is immune from liability for company actions in the capacity as shareholders.
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A corporation is a juridical person created under the laws of the state.
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A fixed price contract holds more risk for the contractor than a cost plus contract.
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A joint venture is an entity separate from its members.
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A joint venture is like a partnership, but it is for one project.
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A liquidity ratio shows the ability of a company to meet its financial obligations.
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A partnership has a "flow-through" type of tax treatment.
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A partnership may have a disproportionate allocation of gains and losses.
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A subcontract should be used if any entity is going to be doing significant onsite work.
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A third-party beneficiary relationship must be intended.
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Accelerated depreciation gives a faster write-off of an asset in its first years of service life.
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An "item" joint venture is when two or more entities unite to each provide certain services needed for the project for which the joint venture was formed.
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An LLC may be managed by a "manager" or by the members.
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An LLC may have perpetual duration.
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An item joint venture has no capital calls because each joint venturer provides the necessary funds for its own part of the project.
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An offer is a unconditional willingness to enter a contract.
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An owner may terminate a construction contract for convenience.
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An unconditional agreement with an offer is an acceptance.
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Apparent authority is created by actions of a party that may be different than the express authority.
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Building codes are enforced by the use of permits, inspections, and testing reports.
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Contractors prefer a broad list of excusable delays.
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Cost-plus-fixed fee contracts invent the contractor to finish quickly.
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Differing site conditions are found in the AIA General Conditions under "concealed conditions" or "unknown or unforeseen conditions".
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Flow-down language in a purchase order incorporates the prime contract provisions.
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If a purchase order from a contractor contains a "no-pay-until-paid" provision (but without a "condition precedent" provision), the material supplier will be owed payment by the contractor even if the contractor never is paid by the owner.
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In a guaranteed maximum price contract the contractor can lose money.
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In an AIA prime construction contract, the contractor always has control over the means, methods, techniques, and sequences of the construction work, unless specifically provided otherwise.
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In an AIA standard form contract, if there is any bias it is in favor of the owner.
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In the accrual method of accounting, income is recognized when it is earned even if it has not been received.
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Job fencing and sanitary facilities are two examples of general conditions (or general construction or general requirements) work usually done by the prime contractor.
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Liquidated damages are an agreed-upon daily amount for finishing late.
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Most negotiated contracts use a cost-plus fee arrangement.
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On a construction project, purchase orders may be used for more than just the purchase of materials used at the site.
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One of the defining characteristics of a corporation is perpetual duration (until liquidation).
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Preemptive rights gives a shareholder the ability to maintain its proportional share of the ownership of the company.
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Privity is the existence of a contractual relationship.
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Purchasing and inspection are two of the parts of procurement.
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Retainage (or retention) is an amount kept by the owner from progress payments owed to the contractor primarily for the purpose of making sure the contractor finishes the project correctly.
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Shipping instructions in a purchase order should include how the materials are to be packaged and marked.
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Straight-line depreciation writes off the depreciable value of an asset at a uniform rate throughout its service life.
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Subcontracts should not be signed until after the prime contract is signed.
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Supplemental conditions are a part of a construction contract.
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Supplementary Conditions change or add to the General Conditions and are project specific.
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Support functions provided by a construction company's home office may be almost as vital to a project's success as the management of the field operations.
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The completed bid form is an offer.
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The completed method of accounting allows a contractor not to recognize income until the project is completed.
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The five threshold red flag construction contract clauses are (1) dispute resolution, (2) changes, (3) differing site conditions, (4) suspensions and delays, and (5) terminations and partial terminations.
T
The four most important things that should be in an advertisement (for a construction project) are: (1) project identification (type of work and location), (2) owner/designer identification, (3) time and place for the bid opening, and (4) instructions how to get the bid documents.
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The general partner in a limited partnership must have substance or the limited partners may be considered general partners.
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The principal reason for licensing of contractors is to keep incompetent people out of the industry.
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The servicing of trash disposal containers at a construction site is an example of a purchase order for services.
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The three sources of liability are contract, tort, and statutory.
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The time provisions in a construction contract are usually measured in calendar days.
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There is an implied obligation for the owner to provide access to the construction site.
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Time is a red flag provision that affects the amount of the bid, not whether or not to proceed with an estimate.
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Unless the prime contract provides otherwise, a prime contractor may use as many subcontractors as it wants.
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Usually, an item joint venture will not own equipment in its own name.
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Whether a construction project will require union labor or not is something that will be found in the Supplementary Conditions or the Agreement.
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With strict liability proof of fault in unnecessary.
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