Key Terms: Contracting

Question 1

Assignability provision

Answer 1

This provision states that neither party may assign its obligations under the contract to any
other person without the express written consent of the other party.

Question 2

Bid request

Answer 2

Also known as request for proposal (RFP). An announcement that an organization is interested in
receiving proposals for a particular project

Question 3

Bid specifications

Answer 3

Detailed instructions about the products or services requested through the bid request. All
contract terms should be included in the bid request

Question 4

Contract

Answer 4

A contract is an agreement between two or more parties—enforceable by law—by which each party
promises to do, or not to do, something

Question 5

Default

Answer 5

Failure of either party to fulfill the terms of the contract

Question 6

Entire obligation provision

Answer 6

This provision states that the written, signed contract constitutes the entire….
This provision states that the law of a particular state will be applied if there are any disputes about the contract after it is signed. This is particularly useful when the community association and the contractor are based in different states.

Question 7

Modification provision

Answer 7

This provision states that the contract may not be modified in any way unless such modification is written and signed by both parties.

Question 8

Payment bond

Answer 8

This bond comes in a package with the performance bond. The surety guarantees that the
contractor’s suppliers and any subcontractors will be paid if the contractor does not pay them

Question 9

Performance bond

Answer 9

This is a guarantee by a surety (a third party) to protect the community association if the
contractor fails to perform or finish the work. Because there is a cost to the community association involved, a performance bond typically is used with certain large projects.

Question 10

Progress payments

Answer 10

Partial payments based on some demonstrable progress in completing the work involved

Question 11

Prospective bidder’s questionnaire

Answer 11

Also known as qualification sheet. This is a document that asks for certain types of information to determine if the bidder is technically and financially qualified to handle a job of this scope.

Question 12

Qualification sheet

Answer 12

Also known as prospective bidder’s questionnaire. This is a document that asks for certain types
of information to determine if the bidder is technically and financially qualified to handle a job of this scope.

Question 13

Request for proposal (RFP)

Answer 13

Also known as bid request. An announcement that an organization is interested in
receiving proposals for a particular project

Question 14

Severability provision

Answer 14

This provision states that if a court finds that any clause of the contract is illegal or unenforceable, that clause shall be severed (separated) from the rest of the contract, so that the whole contract need not be invalidated

Question 15

Waiver of lien

Answer 15

A document which gives up the right to make a claim against the community association for payments
not received.

Question 16

Waiver provision

Answer 16

This provision states that a waiver (permission) by one party of any breach of contract (failure to
fulfill a provision) by the other party shall not act as a general waiver of future breaches

Question 17

Warranty

Answer 17

A warranty should state what is covered, for how long, and what the contractor will do if the work or
product proves defective