Question 1

A statement by an architect to a contractor may be sufficient to establish that the architect is the owner's agent.

Accepted Answer

False&#10;

Question 2

A sub-subcontractor would be covered by a one-tier labour and material payment bond.

Accepted Answer

A one-tier labour and material payment bond typically covers only the direct subcontractors and suppliers of the principal contractor, not sub-subcontractors or suppliers to the subcontractors.

Question 3

What type of agency relationship may be established by representations the owner makes in the construction contract documents? Who is that agency relationship between?

Accepted Answer

Apparent agency. Representations in the contract between the owner and the contractor may imply that an architect is the agent of the owner. To the extent the owner states in the contract documents that the architect may act for the owner, the owner will be accountable if the contractor relies on the architect.

Question 4

What name is given to an agreement in which one party agrees to bear the financial loss of another party for a specified event?

Accepted Answer

The answer of What name is given to an agreement...

Question 5

Under a pay-when-paid clause, if the owner never pays the main contractor, when must the main contractor pay the subcontractors?&#10;A) on the date the owner was due to pay the main contractor&#10;B) a reasonable time after the payment was due&#10;C) when the subcontractor has completed work under the subcontract&#10;D) if the owner never pays, the main contractor is not required to pay the subcontractor

Accepted Answer

Pay-when-paid clauses do not create a condition precedent to payment.

Question 6

Which of the following is true for pay-if-paid clauses between contractors and subcontractors where the contractor is unpaid by the owner?&#10;A) in the absence of default by a subcontractor, they create the only possible excuse for a contractor who has not paid a subcontractor&#10;B) they are never enforced by the courts&#10;C) the triggering event for a pay-if-paid clause is a breach of contract between the contractor and the subcontractor&#10;D) none of the above

Accepted Answer

A pay-if-paid clause may justify a contractor not paying a subcontractor even though that subcontractor completely performed the subcontract. Such clauses have been enforced by some courts, but generally courts avoid enforcing them if they can.

Question 7

Terms from which contract are typically incorporated by reference into subcontracts?&#10;A) a similar subcontract between the main contractor and another subcontractor&#10;B) the contract between the owner and the main contractor&#10;C) a contract between the main contractor and a supplier&#10;D) none of the above

Accepted Answer

Incorporation by reference is a way for the main contractor to assign to a subcontractor the responsibilities he has to the owner. Therefore, reference is made to the contract between the owner and the main contractor.

Deck 5: Selected Contract Issues