CON 421 Contracts - Exam 2
*False*
Unit price contracts are most appropriate when the design is 100% complete and the owner knows exactly what is to be built.
*No*
When a local cement supplier ran out of stock, a contractor ordered 850 bags to be delivered by an upriver source at a higher price. Shortly after placing the order, the local supplier's cement shipment came in. The contractor decided to buy from the local supplier and pay damages for returning the cement upriver. Two days later a shipment of 1,000 bags from upriver arrived. Since 850 bags had been ordered, the contractor said he refused the entire shipment of 1,000 bags. *Q: Must the contractor buy any up river cement?*
*True*
When contractor default, surety can waive the right to complete the contract by determining the amount for which it may be liable to the owner and making the payment to owner.
*True*
When contractor default, the surety company can engage a new contractor by negotiation.
Insurance Certificates Performance Bond *Payment Bond* Bid Bond
Which document guarantees to the Owner that all third parties will be paid or else the Bond will be invoked?
Labor/Material Bond *Bid Bond* Performance Bond Insurance Certificates
Which document guarantees to the Owner that the successful Contractor will sign a contract?
*Instruction to Bidders* General Requirements Advertisement to Bidders Supplementary Conditions286
Which document specifies the Bid Bond Percentage?
*Offer, Acceptance, Meeting of the Minds, and Consideration* Performance, Technical Specifications and Consideration General Conditions, Supplementary Conditions and a Proposal Plans, Technical Specifications, General and Supplementary Conditions
Which of the following contract formation principles are needed to form a valid contract?
Surety *Owner* Architect Contractor
Which party invokes a bond?
*True*
Emergency type projects would be wellsuited for JOC.
*False*
For government project, there is no law to prevent slow payment.
*False*
Generally, surety agent has nothing to do with the success or failure of a contractor's business.
*True*
In I/D contracts, it is recommended that the magnitude of potential rewards and penalties be equal to each other.
*True*
In Pay-if-Paid provision, GC has no obligation to pay subs if the owner fails to pay GC.
*False*
In a surety agreement, the contractor is providing the guarantee for himself.
*True*
In lump sum contracts, the GC has the obligation to complete the job even if the cost exceeds the contract value
*False*
In the JOC contract, owner selects GC only based on pricing.
*True*
In unit price and lump sum contracts, in addition to being paid for work done, the GC s intermediate payments include the cost of the materials stored on the construction site.
*True*
In unit price contracts, the GC has the obligation to complete the job regardless of the line item quantities being smaller or larger than the A/E's estimates, as long as the variation is between 15-25%.
*False*
Projects in which the entire design is completed before construction is to begin and projects in which all quantities can be accurately established are ideal for award by Cost-plus contract.
*False*
Public projects use common-law bonds.
*False*
Retainage is withheld by the owner against S/Cs breach of contract.
*True*
Retainage is withheld by the owner against the cost of remedying defective work.
*True*
SBA Plan A is a surety bond guarantee program to assist qualified small businesses and minority-owned businesses to obtain construction bonds.
*True*
Statute of limitation is the time allotted to actually file a lawsuit after a latent defect has been discovered.
*False*
Statute of repose is the time that the owner has to discover any latent defect after the completion of the project, typically 1 to 3 years.
*True*
Performance bonds are invoked by the owner in case the GC is not able to perform.
*True*
Performance bonds protect the owner against GC default.
*True*
>>>A punch list is a list of items that must be corrected before the project is acceptable to the owner.
*True*
>>>A+B bidding considers not only project cost but also project duration
*True*
>>>In cost plus contracts, the owner must keep a field force to check the receipts, payrolls, vouchers of reimbursable items submitted by the GC
*True*
>>>In the context of contract law, consideration means something (money, or any object or thing) given in return for services performed or for products delivered.
*False*
>>>Surety bonds only covers specific losses.
*False*
>>>The first tier subcontractor must provide a written notice to get payment from surety when prime contractor defaults.
*False*
A big advantage of the unit price contract is that the owner knows the final cost of the job right at the outset with certainty.
*No*
A city ordinance stated that no erection or repair work on buildings was to commence prior to obtaining a building permit. A contract in that city stated work should be carried out "without obtaining any building permit". The contractor defaulted on the contract. The owner sued the contractor. *Q: Should the contractor pay damages?*
*False*
A contract has to be enforced regardless of whether the subject of the contract is legal or not.
*True*
A contract is a promise for the breach of which the law gives a remedy and the performance of which the law recognizes as a duty.
*True*
A contract is not binding if a party to the contract can prove that he was drunk at the time the contract was signed.
*False*
A sidewalk that is two inches narrower than specified is considered as a latent defect.
*Yes*
An uncle promised his nephew $5,000 if the boy refrained from smoking until reaching the age of 21. The boy did this and upon turning 21 asked his uncle for the $5,000. When payment was refused, the nephew sued his uncle. *Q: Was there consideration?*
*True*
Cashier's Check, Money order, and Certified check can be bid bond alternatives.
*False*
Most public and private contracts are cost plus contracts
*False*
Contract bonds are submitted by all S/Cs to the construction owner for the protection of the GC.
*True*
JOC is especially advantageous when emergencies arise.
*False*
Letter of credit places the financial burden of a default dispute on the owner.
*False*
Lump sum contracts are most appropriate when the design is not complete and the owner does not have a good idea of what is to be built
*True*
Many change orders are to be expected in cost plus contracts.
*False*
Owner is the only party to prepare the Punch list.
*False*
Payment requests for Lump-Sum contract does not include subcontracted work.
Yes, they will lose the amount of their Bond Premium *Yes, they will lose the amount of their Bid Bond Face Value* No, they will lose nothing, they will withdraw without ramifications Yes, they will lose the amount of their Performance Bond Face Value
The Contractor submits a bid for $1,303,071 with the appropriate forms. They receive a Notice of Award letter indicating that their bid has been selected. The Contractor decides not to accept the contract. Will the Contractor lose anything?
*False*
The Miller Act stipulates surety bonds are required of construction contractors on both private and public projects.
*False*
The construction contract is financed by the contractor.
*False*
The contractor can not stop the work even if the owner does not make timely payments.
*False*
The making of periodic payments by the owner as the work progresses constitute the full acceptance of the work.
The principle of Consideration has been met, therefore, responsive bid The principle of Legal Capacity has been met, therefore, responsive bid The principle of the meeting of the minds has been met, therefore, responsive bid *The principle of Legal Capacity has not been met, therefore, a non-responsive bid*
The owner requests that you submit a proposal supplement titled "Statement of contractors' Qualifications All Contracts" and under the officers/principals section it requests the names and titles of the vice president and the president. A proposal is submitted to the Owner with a bid bond, signed addenda, and the proposal form is attached and signed by the chief estimator. Have all of the contract formation principles been satisfied and would the proposal be considered responsive?
*False*
The parties who sign the contract must be legally competent but do not have to be older than 18 years of age.
*False*
The payments in lump sum contracts are made on the basis of the quantities produced by the GC.
*True*
The surety will investigate contractor's adequacy of working capital and the availability of credit before issuing contract bonds.
*True*
The warranty period typically begins at substantial completion.
