6 - Contracts

Question 1

is the party that makes the promise.

Answer 1

Promisor

Question 2

is on the receiving end of the promise

Answer 2

Promisee

Question 3

benefits from a contract by acquiring rights under the contract and has the ability to enforce the contract once those rights have vested.

Answer 3

Intended beneficiary

Question 4

When a non-party to a contract receives benefit from the agreement directly.

Answer 4

Intentional beneficiary

Question 5

Important things must be shown in the Contract

Answer 5

• Name of both parties
• price
• clause that expressly states agreement to the terms of the contract

Question 6

Elements of the Contract

Answer 6

1. An offer
2. Acceptance of the offer
3. Consideration, like money or something else of value to the parties
4. Mutual intent of both parties to fulfill the contract promises
5. Capacity
6. Legally enforceable terms that do not violate law

Question 7

Four Common types of Construction
Contract

Answer 7

• lump sum
• cost plus
• time and material
• unit pricing

Question 8

specify a total fixed price that will be paid for all construction work. This type of contract is most commonly used when the owner wants to evade dealing with change orders for unspecified work.

Answer 8

fixed price / lump sum

Question 9

designate the buyer to pay the costs of construction, purchases, and other expenses produced from construction activity. This type of contract is most commonly used when the scope hasn’t been clearly defined.

Answer 9

cost plus

Question 10

the owner pays the contractor an agreed amount over and above the documented cost of work.

Answer 10

cost plus fixed fee

Question 11

owner pays greater than 100 percent of the documented cost, usually requiring detailed expense accounting. This type of contract is suitable for emergency work like difficulties in foundation conditions, construction of expensive structure etc.

Answer 11

cost plus percentage of cost

Question 12

involve the owner paying for the time and materials spent on a project. This type of contract is most commonly used when the project scope is small or unclear.

Answer 12

time and material

Question 13

involve the contractor determining a specific price for a certain task. This type of contract is most commonly used on repetitive or public works projects.

Answer 13

unit pricing

Question 14

contract that is signed and has the (wax) seal of the signer attached

Answer 14

special contracts