Contracts & ExecutionQuestion 68 of 1605
Which contract type places the MOST financial risk on the contractor?
a.Cost-plus contract
b.Fixed-price (lump sum) contract
c.Time and materials contract
d.Unit price contract
Explanation
Under a fixed-price (lump sum) contract, the contractor agrees to complete the work for a set price regardless of actual costs. If costs exceed the estimate, the contractor absorbs the loss.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- An owner includes a liquidated damages clause of $500 per day for late completion. This clause is enforceable if:
- A contractor must provide an owner with a "Notice to Owner" (preliminary notice) primarily to:
- Under a "time and materials" (T&M) contract, the owner pays:
- A subcontractor fails to complete their scope of work on a project. The prime contractor's primary recourse is:
- California's "prompt payment" law requires owners to pay general contractors within how many days of a proper invoice?
- A general contractor must pay a subcontractor within how many days of receiving payment from the owner?
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)