North Carolina General Contractor Exam — All Questions
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Which set of elements is generally required for a contract to be legally valid and enforceable?
- a.A notary stamp, a witness, and a deposit
- b.A blueprint, a permit, and a bond
- c.Offer, acceptance, consideration, legal capacity, and a lawful purpose✓
- d.A handshake, a logo, and an invoice
A valid contract requires an offer, acceptance of that offer (mutual assent), consideration (something of value exchanged by each side), parties with legal capacity to contract, and a lawful purpose. If any element is missing — for example, no consideration or an illegal objective — the agreement may be void or unenforceable. Notaries, permits, and bonds are sometimes useful but are not the core elements of contract formation.
A construction contract states that the contractor will pay the owner $500 for each day the project finishes late, agreed in advance as a reasonable estimate of the owner's loss. This clause is best described as:
- a.A performance bond
- b.A liquidated damages clause✓
- c.A mechanic's lien
- d.A punitive penalty that courts always strike down
Liquidated damages are a dollar amount the parties agree to IN ADVANCE as compensation for a breach (commonly late completion) when the actual loss would be hard to calculate. To be enforceable the amount must be a reasonable pre-estimate of the harm, not a punishment. A performance bond is a surety guarantee, and a mechanic's lien secures payment for labor and materials — different tools entirely.
The owner asks the contractor to add a bathroom that was not in the original signed contract. What is the correct way to authorize and price this added work?
- a.A written change order signed by both parties before the work proceeds✓
- b.A verbal 'go ahead' with no documentation
- c.An adjustment made quietly on the final invoice
- d.A new lawsuit filed against the owner
A change order is a written amendment that documents a modification to the scope, price, or schedule and is signed by both parties. Handling changes in writing before performing the work protects the contractor's right to be paid for the extra work and prevents disputes about what was authorized. Relying on verbal approvals is a leading cause of payment disputes.
Under the Statute of Frauds, which of the following is generally required to be in writing to be enforceable?
- a.A one-hour verbal agreement to sweep a job site
- b.A casual promise to lend a friend a hammer
- c.An agreement to buy lunch for the crew
- d.A contract for the sale of land or an interest in real property✓
The Statute of Frauds requires certain categories of contracts to be in writing and signed to be enforceable — most notably contracts for the sale of land or interests in real property, and agreements that cannot be performed within one year. This is why construction and real-property agreements are documented in writing. Minor, short, everyday arrangements are not covered.