Contract Law

Question 1

Simple definition of a contract?

Answer 1

Legally Binding Agreement

Question 2

What are the six requirements for a bonding contract?

Answer 2

1 - Agreement between parties
2 - Parties need to have Capacity to enter into an agreement
3 - Genuine intention to for a binding legal relationship
4 - Contract has to be supported by consideration
5 - Contract must have lawful intent and not be contrary to public
policy.
6 - Certain Formalities may be required

Question 3

When does an offer lapse?

Answer 3

After a specified time, after a reasonable time or upon the death of the offer.

Question 4

Does a qualified acceptance create a contract?

Answer 4

No the Acceptance must be unconditional

Question 5

Can action amount to acceptance rather than a verbally communicated acceptance of an offer.

Answer 5

Yes acceptance may be by action rather than by oral or written communication

Question 6

How can you check if someone entering into a contract on behalf of a corporation is authorized to do so?

Answer 6

Obtain a company by law that states the person is authorized to do so

Question 7

What determines whether an owner is allowed to make changes to the scope of the work.

Answer 7

Whether it is written in the contract

Question 8

What is an agreement between owner and the contractor to make a certain change in the contract work for an agreed price or method of payment?

Answer 8

Change order

Question 9

Contractor has no right to change the work without what?

Answer 9

Written permission from a consultant

Question 10

3 common methods for payment used for changes in work

Answer 10

Contractor quotes a price for a proposed change is then payed monthly till completion of extra work

Paid for at unit price included in the contract

Work is paid for using a cost plus formula

Question 11

3 common methods for payment used to settle claims, disputes and matters of interpretation?

Answer 11

Negotiation

Mediation

Arbitration

Question 12

Who is responsible for creating builders lien rights?

Answer 12

Provincial legislation

Question 13

What is a builders lien?

Answer 13

A charge or encumbrance a person has on some property for payment of a debt.

Question 14

Why is the owner required to holdback a percentage of the payments to the contactor?

Answer 14

The fund stands in the place of the property so that, if a lien is registered, the owner can use the retention fund to clear the lien from the land title.

Question 15

In Alberta, the statutory holdback is what value of the work done?

Answer 15

10%

Question 16

The Alberta lien statute requires the contractor to issue the certificate of ?

Answer 16

Substantial performance when the contractor considers the work to be substantially incomplete

Question 17

Where do you file a lien and what is it against?

Answer 17

Filed at the Land Titles Office against the land title of the project property.

Question 18

If not written in the contract does a contractor require permissionof the owner to submit subcontracts to outside parties?

Answer 18

No

Question 19

What is Novation?

Answer 19

The process of novation is used when a party to a contract wants to pass both there rights and obligations to a third party.

Question 20

Another name for a tender?

Answer 20

A Bid

Question 21

Why do owners elect to use the bid process?

Answer 21

To use competition to help obtain lowest price for the project

Question 22

What governs the process of public bidding?

Answer 22

Governed by municipal, provincial, or federal regulations depending on the funding of the project.

Question 23

Purpose of a surety bond?

Answer 23

Bonding company guarantees a contractor will meet certain obligations to the owner

Question 24

Why can signing a surety bond be costly

Answer 24

If all the details and implications are not understood prior to signing

Question 25

Purpose of a Bid Bond?

Answer 25

Ensures owner whoever’s bid is accepted that they within a required time period enter into a contract

Question 26

What is a performance bond?

Answer 26

Covers the owner for any losses costed by the contractor

Question 27

5 types of bonds described in this module

Answer 27

Performance
Labour and material payment
Maintenance
Supply
Payment

Question 28

2 common types of construction insurance?

Answer 28

Liability insurance
Property Insurance