Florida General Contractor Exam — All Questions

A contractor is owed $40,000 on a genuinely disputed account, and the owner sends a check for $28,000 marked 'payment in full.' If the contractor deposits it without objection, the likely result is:

• a.The contractor keeps the right to sue for the $12,000 balance in every state
• b.The dispute is settled for $28,000 under an accord and satisfaction✓
• c.The check is void because the notation was added unilaterally
• d.The owner must pay the balance together with interest

Where the debt is genuinely disputed and the tender is clearly conditioned on full settlement, cashing the check accepts the accord and the claim is satisfied, which is why the correct move is to return the check or follow the state's procedure for reserving rights before negotiating it. The notation does not void the instrument. An owner who has settled owes neither the balance nor interest on it. The doctrine turns on a genuine dispute, since a plain undisputed debt is not discharged this way.

How does a statute of repose differ from a statute of limitations for construction defect claims?

• a.Repose applies to contractors and limitations applies to owners
• b.Repose is created by contract and limitations by state statute
• c.Repose runs from completion; limitations runs from discovery✓
• d.Repose reaches only personal injury claims, not property damage

A statute of limitations starts running when the claim accrues, often when the defect is or should have been discovered, so a hidden defect can keep it alive for a long time. A statute of repose sets an outer wall measured from substantial completion and can extinguish a claim before anyone knows there is one. Both are statutory rather than contractual, both are available to whoever is sued, and both reach property damage as well as injury. The length of each is set by each state and differs considerably.

A contractor wants another firm to take over its remaining obligations on a project and wants to be released from them. What does that require?

• a.A novation, consented to by all three parties✓
• b.An assignment, which the contractor may make on its own initiative
• c.A subcontract between the contractor and the incoming firm
• d.A change order signed by the owner and the original contractor

An assignment can transfer benefits but does not by itself relieve the assignor of its duties, so the original contractor would stay on the hook. Only a novation, agreed by the owner, the outgoing contractor and the incoming one, releases the original party and puts the new one in its place. Subcontracting delegates the work while leaving the prime fully responsible, and a change order alters scope, time or price rather than the identity of the party bound.

Two months before the start date, a subcontractor writes that it will not be performing the contract at all. The general contractor may:

• a.Wait until the start date passes and the subcontractor fails to appear
• b.Terminate only after giving the subcontractor a 30-day period to cure
• c.Recover only the deposit that has already been paid to the subcontractor
• d.Treat the contract as breached at once and cover with a replacement subcontractor✓

A clear and unequivocal refusal to perform before performance is due is an anticipatory repudiation, and the non-breaching party may act immediately rather than wait for a failure everyone can already see coming. Waiting can even conflict with the duty to mitigate. A cure period applies only where the contract's termination clause creates one, and damages are the cost of covering, meaning the difference between the replacement price and the original price, not merely a refund of a deposit.

A contract requires written notice of any claim for additional time or money within seven days of the event. The contractor mentions a delay verbally at a weekly meeting but sends nothing. What is the likely consequence?

• a.The meeting minutes automatically satisfy the written notice requirement
• b.Notice provisions of this kind are not enforceable against a contractor
• c.The claim may be waived, however good it was✓
• d.The seven days run from completion

Courts in most states enforce notice provisions, because timely written notice lets the owner investigate, mitigate and budget while the facts are still fresh, and missing it can forfeit an otherwise valid claim. Meeting minutes are not the written notice the clause calls for unless the contract says they are. The clock runs from the event rather than from completion, which is the entire point of a short notice period.

On many private projects a supplier who has no contract with the owner sends a preliminary notice soon after first delivering material. What is its purpose?

• a.To preserve the sender's right to claim a lien later✓
• b.To create a lien against the property as of the date it is delivered
• c.To demand payment of the first invoice within the statutory period
• d.To register the supplier with the building department for that permit

A preliminary notice, sometimes called a notice to owner, tells an owner who would otherwise have no idea that a party several tiers down is contributing to the improvement, and in states that require it, failing to send it forfeits lien rights no matter how good the underlying debt is. It is not itself a lien, since recording a lien claim is a separate later step, and it is not a demand for payment. Building departments have no role in it. Whether it is required at all, and by when, is set by each state's lien statute.

A completed job carries $10,000 of total cost, and you want to keep a 20% gross margin. What must the selling price be?

• a.$12,500✓
• b.$12,000
• c.$8,000
• d.$10,200

For a target margin you divide cost by (1 - margin): 10,000 / (1 - 0.20) = 10,000 / 0.80 = $12,500. Multiplying cost by 1.20 gives $12,000, which is only a 16.7% margin, not 20% - the exam's signature trap.

Which pair of definitions correctly distinguishes markup from margin?

• a.Markup = profit / selling price; margin = profit / cost
• b.Markup and margin are the same percentage expressed two ways
• c.Markup = cost / profit; margin = selling price / profit
• d.Markup = profit / cost; margin = profit / selling price✓

Markup divides profit by cost (what you added on top of cost); margin divides profit by selling price (the share of the customer's dollar you keep). Because cost is smaller than price, markup % is always the larger number for the same profit.

A subcontractor has $180,000 of annual overhead on $900,000 of annual direct job cost. Using the percentage-of-cost method, what is the true (total) cost of a job with $30,000 of direct cost, before profit?

• a.$30,000
• b.$48,000
• c.$33,000
• d.$36,000✓

The overhead rate is 180,000 / 900,000 = 20%. The job must carry $30,000 x 20% = $6,000 of overhead, so total cost = 30,000 + 6,000 = $36,000. Direct cost + allocated overhead = total cost, before any profit is added.

How many cubic yards of concrete are in a 30 ft x 40 ft slab poured 4 inches thick (before any waste factor)?

• a.44.4 cy
• b.14.8 cy✓
• c.400 cy
• d.4.9 cy

Convert thickness to feet (4 / 12 = 0.333 ft), then cy = (length x width x thickness) / 27 = (30 x 40 x 0.333) / 27 = 399.6 / 27 = about 14.8 cy. There are 27 cubic feet in a cubic yard.

On a $1,000,000 contract with 10% retainage, the contractor has completed 40% of the schedule of values and received no prior payments. Using AIA G702/G703 logic, what amount is due on this application?

• a.$440,000
• b.$400,000
• c.$40,000
• d.$360,000✓

Amount due = (work completed and stored to date) - retainage - prior payments. Work to date is 40% x $1,000,000 = $400,000; less 10% retainage ($40,000); less $0 prior = $360,000. The withheld $40,000 is released later per the contract.Amount due = value completed/stored - retainage - prior payments; AIA G702/G703 (Ch. 2, Part E)

A supplier offers terms of 2/10, net 30. Approximately what effective annual interest rate does a contractor pay by skipping the discount and paying on day 30 instead of day 10?

• a.24%
• b.37%✓
• c.2%
• d.12%

Effective annual rate = (discount / (100% - discount)) x (365 / (full period - discount period)) = (2/98) x (365/20) = 0.0204 x 18.25 = about 37%. Forgoing the discount is like borrowing at ~37% a year, so a contractor with cash should almost always take it.

A Florida contractor performs a lump-sum real-property improvement. How is Florida sales/use tax handled on the materials?

• a.Real-property improvements are entirely exempt from Florida sales and use tax, so the contractor buys materials on a resale certificate
• b.The owner self-reports use tax at 6% on the finished improvement's fair market value
• c.The contractor is the ultimate consumer and owes tax (6% plus any county surtax) on the contractor's cost of the materials✓
• d.The contractor collects 6% plus surtax from the owner on the full contract price and remits it as a retailer

A lump-sum improvement contractor is treated as the ultimate consumer of the materials, owing sales or use tax on the contractor's material cost (6% state plus any discretionary county surtax) rather than charging the customer tax like a retailer. It is a cost built into the bid.Fla. Stat. 212.06(1); Fla. Admin. Code Rule 12A-1.051 (Ch. 2, Part D)

Which AIA document is the 'rulebook' that defines notice, claims, changes, payment, and dispute-resolution provisions and is referenced by the owner-contractor agreement?

• a.A401 - Standard Form of Agreement Between Contractor and Subcontractor
• b.A201 - General Conditions of the Contract for Construction✓
• c.G703 - Continuation Sheet to the Application and Certificate for Payment
• d.A701 - Instructions to Bidders

A201 (current edition A201-2017) is the general conditions - the rulebook for owner, contractor, and architect covering notice, claims, changes, payments, and disputes. A701 governs bidding, A401 governs the contractor-sub relationship, and G703 is payment-application backup.AIA A201-2017 General Conditions (Ch. 2, Part F, AIA document families)

In the AIA pay-application family, what is the relationship between the G702 and the G703?

• a.The G702 lists the subcontractors on the job; the G703 lists material suppliers and their invoice totals
• b.The G702 is the one-page summary and certificate; the G703 is the itemized continuation sheet whose line totals roll up into the G702✓
• c.Both are one-page summaries of the same information, and the owner chooses which one to require
• d.The G703 is the one-page summary and architect's certificate; the G702 is the line-by-line schedule of values whose totals roll up into it

Remember 'G702 summarizes; G703 itemizes.' The G702 is the one-page Application and Certificate for Payment (contract sum, completed to date, retainage, amount due, with certifications); the G703 continuation sheet details each schedule-of-values line, and its totals roll up into the G702.AIA G702 / G703 (Ch. 2, Part E)

On a $2,000,000 Florida county project, the contract clause calls for 10% retainage on each progress payment. Under Florida's public-construction retainage statute, what is the maximum the public entity may withhold?

• a.10%, because the contract controls
• b.No maximum applies to public projects
• c.2% of each progress payment
• d.5% of each progress payment✓

Florida caps public-construction retainage at 5% of each progress payment for contracts over $200,000; a contract clause exceeding that is unenforceable to the extent of the excess. The statutory cap protects the contractor's cash flow regardless of the contract language.Fla. Stat. 255.078(1) (public construction retainage, 5% cap; applies to contracts over $200,000)

A contractor stops paying an electrical subcontractor midway through a project. Which bond is the sub's remedy, and whom does that bond protect?

• a.The payment bond, which protects subcontractors and suppliers✓
• b.The performance bond, which protects the owner against a contractor default
• c.The bid bond, which protects the owner
• d.The performance bond, which runs to the subcontractor and guarantees payment

The payment bond guarantees the contractor pays its subs and suppliers, so it protects them. A bid bond protects the owner against a low bidder who backs out; a performance bond protects the owner by assuring completion. Each of the three bonds runs to a different party.AIA A312 payment bond; surety-bond protection map (Ch. 2, Part G)

What is the key difference between a mediator and an arbitrator in construction dispute resolution?

• a.Both impose binding decisions; the mediator's award may be appealed to circuit court, while the arbitrator's may not
• b.A mediator facilitates a voluntary settlement and cannot impose a result (non-binding); an arbitrator hears the dispute and renders a decision that is usually binding✓
• c.A mediator issues a binding award enforceable in circuit court; an arbitrator only offers a recommendation the parties may reject
• d.A mediator is a sitting circuit judge appointed by the court and an arbitrator is chosen by the parties; both conduct public trials on the record and both rulings are final

A mediator is a neutral who helps the parties reach their own voluntary settlement and cannot impose an outcome (mediation is non-binding). An arbitrator, by contrast, hears evidence and decides the case, and a binding-arbitration award is enforceable in court and only narrowly appealable.