Question 1

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

An indemnity agreement.

Question 2

Which of the following is true for pay-if-paid clauses between contractors and subcontractors where the contractor is unpaid by the owner?

Accepted Answer

A)   in the absence of default by a subcontractor, they create the only possible excuse for a contractor who has not paid a subcontractor
B)   they are never enforced by the courts
C)   the triggering event for a pay-if-paid clause is a breach of contract between the contractor and the subcontractor
D)   none of the above A

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

Terms from which contract are typically incorporated by reference into subcontracts?

Accepted Answer

A)   a similar subcontract between the main contractor and another subcontractor
B)   the contract between the owner and the main contractor
C)   a contract between the main contractor and a supplier
D)   none of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

The answer of What type of agency relationship may be...

Question 7

Under a pay-when-paid clause, if the owner never pays the main contractor, when must the main contractor pay the subcontractors?

Accepted Answer

A)   on the date the owner was due to pay the main contractor
B)   a reasonable time after the payment was due
C)   when the subcontractor has completed work under the subcontract
D)   if the owner never pays, the main contractor is not required to pay the subcontractor

Exam 5: Selected Contract Issues