NEVADA CONTRACTOR GENERAL BUSINESS AND LAW (CMS) EXAM – QUESTIONS AND ANSWERS |
VERIFIED AND WELL DETAILED ANSWERS | PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM
UPDATE
Core Domains
1. Nevada Revised Statutes (NRS) Chapter 624 – Contractors and Contracting
2. Nevada Administrative Code (NAC) Chapter 624 – Regulations for Contractors
3. Business Organization and Structure for Contractors
4. Contract Law, Formation, and Execution
5. Lien Law (Mechanics and Materialmen’s Liens)
6. Financial Management, Accounting, and Bonding
7. Risk Management, Insurance, and Worker’s Compensation
8. Safety Standards (OSHA and State-Level)
9. Ethics, Consumer Protection, and Professional Conduct
10. Project Management and Estimating Principles
Introduction
This comprehensive examination is designed to rigorously assess the knowledge, skills, and judgment
required of a licensed contractor practicing within the state of Nevada. It serves as a definitive tool for
evaluating competency in the regulatory, legal, and business principles codified in NRS Chapter 624 and
NAC Chapter 624, alongside fundamental business and project management concepts. The exam is
structured with a combination of direct multiple-choice questions and scenario-based problems that
require the application of knowledge to complex, real-world situations. Emphasis is placed on the
practical decision-making and ethical standards that underpin successful and compliant contracting,
ensuring that candidates are not only knowledgeable but also capable of applying these principles in the
field to protect the public, their business, and their employees.
SECTION ONE: QUESTIONS 1 – 100
1. Under NRS 624, which of the following activities defines the scope of "contracting" requiring a
license?
A. Performing construction work under the direct supervision of a licensed contractor.
B. Bidding or advertising to perform construction work for another person.
C. Providing material and labor for a project where the total cost is less than $1,000.
D. Remodeling an existing residential structure for the owner's personal use.
🟢B
🔴 Explanation: NRS 624 defines "contracting" broadly to include bidding, advertising, or offering to
perform work, or actually performing work, for another person for compensation. Option A is incorrect
because supervision may require a license, but the activity itself is performing the work. Option C is a
statutory exception. Option D is not contracting if the owner is performing the work themselves.
,2. When must a Nevada contractor notify the State Contractors Board of a change in their business
address?
A. Within 30 days of the change.
B. Within 10 days of the change.
C. Within 60 days of the change.
D. Within 15 business days of the change.
🟢A
🔴 Explanation: NAC 624.308 requires a licensed contractor to notify the Board in writing within 30
days of any change in the business address, mailing address, or residence address. Failure to do so can
result in disciplinary action.
3. A contractor is about to enter into a contract for a home improvement project valued at $12,000.
What is the most critical requirement under Nevada law regarding this contract?
A. The contract must be filed with the State Contractors Board.
B. The contract must be in writing and signed by all parties.
C. The contract must be notarized by a Nevada Notary Public.
D. The contract must include a 3-day right to cancel clause.
🟢B
🔴 Explanation: NRS 624.630 requires all contracts for home improvement, regardless of amount, to
be in writing and signed by all parties. While a 3-day right to cancel may apply to certain situations
(e.g., door-to-door sales), it is not a universal requirement for all home improvement contracts. The
contract is not required to be filed with the Board.
4. What is the penalty for a contractor who willfully fails to pay a subcontractor or supplier, as
provided by NRS 624.265?
A. A fine of up to $5,000.
B. Automatic suspension of the contractor's license.
C. The contractor shall be guilty of a misdemeanor.
D. The contractor's license may be revoked or suspended, and they may be subject to a civil penalty.
🟢D
🔴 Explanation: NRS 624.265 states that the Board may take disciplinary action against a licensee,
including revoking or suspending the license and imposing a civil penalty, for the willful failure to pay
monies owed to a subcontractor or supplier for work or materials. While criminal penalties may apply
in some cases, the primary penalty under this specific section is administrative action.
,5. Which of the following situations would likely result in the denial of a contractor's license
application by the Nevada State Contractors Board?
A. The applicant has a prior conviction for a felony involving theft.
B. The applicant has less than three years of experience in the trade.
C. The applicant has not yet chosen a permanent business address.
D. The applicant is a limited liability company without a qualifying individual.
🟢A
🔴 Explanation: NRS 624.260 provides grounds for the denial of a license, which includes a conviction
for a crime involving moral turpitude or a felony. Theft is a crime of moral turpitude. The Board
requires four years of experience (NRS 624.215), not three. An applicant must have a business address,
but a permanent one is not always immediately required. An LLC must have a qualifying individual.
6. In the context of a construction contract, what is the primary purpose of a 'force majeure' clause?
A. To allow the contractor to increase the contract price if material costs rise.
B. To release the contractor from liability for failing to perform due to unforeseen and unavoidable
circumstances.
C. To allow the owner to terminate the contract for convenience.
D. To allow the contractor to subcontract the work to a third party.
🟢B
🔴 Explanation: A force majeure clause (or "Act of God" clause) is a contract provision that absolves a
party from liability for failing to perform their obligations when such failure is due to events beyond
their control, such as natural disasters, war, or government actions. It does not deal with price
increases (which is a price escalation clause), termination for convenience, or the right to subcontract.
7. A contractor is submitting a bid for a public works project. The bid requirements state that the
project is to be paid for using federal funds. Which federal law is most likely applicable to this
project's wage requirements?
A. The Taft-Hartley Act.
B. The Davis-Bacon Act.
C. The Fair Labor Standards Act.
D. The Occupational Safety and Health Act.
🟢B
🔴 Explanation: The Davis-Bacon Act applies to contractors and subcontractors performing on
federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of
public buildings or public works, requiring them to pay their laborers and mechanics at least the
prevailing wage rates in the area.
, 8. Under Nevada's mechanic's lien law, what is the general time limit for a subcontractor to record a
mechanic's lien after the work has been performed?
A. Within 10 days of substantial completion.
B. Within 90 days of the last date of work.
C. Within 120 days of the last date of work.
D. Within 60 days of the contract's completion.
🟢B
🔴 Explanation: NRS 108.225(1) generally requires a subcontractor, material supplier, or laborer (who
does not have a direct contract with the owner) to record a mechanic's lien within 90 days after the last
date on which work was performed or materials were furnished.
9. Which of the following is considered a primary legal benefit of forming a Nevada Limited Liability
Company (LLC) for a contracting business?
A. Avoiding all state and local taxes.
B. Complete exemption from the State Contractors Board's licensing requirements.
C. Limited liability for the owners, protecting personal assets from business debts and judgments.
D. The ability to operate without any formal business records or meetings.
🟢C
🔴 Explanation: The primary advantage of an LLC is the limited liability protection it affords its
members. This means that members' personal assets are generally shielded from the company's debts
and liabilities, including lawsuits arising from construction projects. LLCs are still subject to taxation
and licensing requirements and must maintain formal records.
10. A contractor notices an error in their bid after it has been submitted and accepted. The bid is
significantly lower due to a mathematical mistake. What is the contractor's best course of action?
A. Refuse to sign the contract.
B. Notify the owner immediately and request to cancel the contract due to a material mistake.
C. Proceed with the project at the lower bid and absorb the loss.
D. File a claim with the State Contractors Board.
🟢B
🔴 Explanation: Under contract law, a unilateral mistake (one party's mistake) may be grounds to
rescind (cancel) the contract if the mistake is material, it goes to the heart of the contract, and the
other party knew or should have known of the mistake. A significant mathematical error in a bid is a
classic example. The contractor must notify the owner promptly and in good faith.
VERIFIED AND WELL DETAILED ANSWERS | PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM
UPDATE
Core Domains
1. Nevada Revised Statutes (NRS) Chapter 624 – Contractors and Contracting
2. Nevada Administrative Code (NAC) Chapter 624 – Regulations for Contractors
3. Business Organization and Structure for Contractors
4. Contract Law, Formation, and Execution
5. Lien Law (Mechanics and Materialmen’s Liens)
6. Financial Management, Accounting, and Bonding
7. Risk Management, Insurance, and Worker’s Compensation
8. Safety Standards (OSHA and State-Level)
9. Ethics, Consumer Protection, and Professional Conduct
10. Project Management and Estimating Principles
Introduction
This comprehensive examination is designed to rigorously assess the knowledge, skills, and judgment
required of a licensed contractor practicing within the state of Nevada. It serves as a definitive tool for
evaluating competency in the regulatory, legal, and business principles codified in NRS Chapter 624 and
NAC Chapter 624, alongside fundamental business and project management concepts. The exam is
structured with a combination of direct multiple-choice questions and scenario-based problems that
require the application of knowledge to complex, real-world situations. Emphasis is placed on the
practical decision-making and ethical standards that underpin successful and compliant contracting,
ensuring that candidates are not only knowledgeable but also capable of applying these principles in the
field to protect the public, their business, and their employees.
SECTION ONE: QUESTIONS 1 – 100
1. Under NRS 624, which of the following activities defines the scope of "contracting" requiring a
license?
A. Performing construction work under the direct supervision of a licensed contractor.
B. Bidding or advertising to perform construction work for another person.
C. Providing material and labor for a project where the total cost is less than $1,000.
D. Remodeling an existing residential structure for the owner's personal use.
🟢B
🔴 Explanation: NRS 624 defines "contracting" broadly to include bidding, advertising, or offering to
perform work, or actually performing work, for another person for compensation. Option A is incorrect
because supervision may require a license, but the activity itself is performing the work. Option C is a
statutory exception. Option D is not contracting if the owner is performing the work themselves.
,2. When must a Nevada contractor notify the State Contractors Board of a change in their business
address?
A. Within 30 days of the change.
B. Within 10 days of the change.
C. Within 60 days of the change.
D. Within 15 business days of the change.
🟢A
🔴 Explanation: NAC 624.308 requires a licensed contractor to notify the Board in writing within 30
days of any change in the business address, mailing address, or residence address. Failure to do so can
result in disciplinary action.
3. A contractor is about to enter into a contract for a home improvement project valued at $12,000.
What is the most critical requirement under Nevada law regarding this contract?
A. The contract must be filed with the State Contractors Board.
B. The contract must be in writing and signed by all parties.
C. The contract must be notarized by a Nevada Notary Public.
D. The contract must include a 3-day right to cancel clause.
🟢B
🔴 Explanation: NRS 624.630 requires all contracts for home improvement, regardless of amount, to
be in writing and signed by all parties. While a 3-day right to cancel may apply to certain situations
(e.g., door-to-door sales), it is not a universal requirement for all home improvement contracts. The
contract is not required to be filed with the Board.
4. What is the penalty for a contractor who willfully fails to pay a subcontractor or supplier, as
provided by NRS 624.265?
A. A fine of up to $5,000.
B. Automatic suspension of the contractor's license.
C. The contractor shall be guilty of a misdemeanor.
D. The contractor's license may be revoked or suspended, and they may be subject to a civil penalty.
🟢D
🔴 Explanation: NRS 624.265 states that the Board may take disciplinary action against a licensee,
including revoking or suspending the license and imposing a civil penalty, for the willful failure to pay
monies owed to a subcontractor or supplier for work or materials. While criminal penalties may apply
in some cases, the primary penalty under this specific section is administrative action.
,5. Which of the following situations would likely result in the denial of a contractor's license
application by the Nevada State Contractors Board?
A. The applicant has a prior conviction for a felony involving theft.
B. The applicant has less than three years of experience in the trade.
C. The applicant has not yet chosen a permanent business address.
D. The applicant is a limited liability company without a qualifying individual.
🟢A
🔴 Explanation: NRS 624.260 provides grounds for the denial of a license, which includes a conviction
for a crime involving moral turpitude or a felony. Theft is a crime of moral turpitude. The Board
requires four years of experience (NRS 624.215), not three. An applicant must have a business address,
but a permanent one is not always immediately required. An LLC must have a qualifying individual.
6. In the context of a construction contract, what is the primary purpose of a 'force majeure' clause?
A. To allow the contractor to increase the contract price if material costs rise.
B. To release the contractor from liability for failing to perform due to unforeseen and unavoidable
circumstances.
C. To allow the owner to terminate the contract for convenience.
D. To allow the contractor to subcontract the work to a third party.
🟢B
🔴 Explanation: A force majeure clause (or "Act of God" clause) is a contract provision that absolves a
party from liability for failing to perform their obligations when such failure is due to events beyond
their control, such as natural disasters, war, or government actions. It does not deal with price
increases (which is a price escalation clause), termination for convenience, or the right to subcontract.
7. A contractor is submitting a bid for a public works project. The bid requirements state that the
project is to be paid for using federal funds. Which federal law is most likely applicable to this
project's wage requirements?
A. The Taft-Hartley Act.
B. The Davis-Bacon Act.
C. The Fair Labor Standards Act.
D. The Occupational Safety and Health Act.
🟢B
🔴 Explanation: The Davis-Bacon Act applies to contractors and subcontractors performing on
federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of
public buildings or public works, requiring them to pay their laborers and mechanics at least the
prevailing wage rates in the area.
, 8. Under Nevada's mechanic's lien law, what is the general time limit for a subcontractor to record a
mechanic's lien after the work has been performed?
A. Within 10 days of substantial completion.
B. Within 90 days of the last date of work.
C. Within 120 days of the last date of work.
D. Within 60 days of the contract's completion.
🟢B
🔴 Explanation: NRS 108.225(1) generally requires a subcontractor, material supplier, or laborer (who
does not have a direct contract with the owner) to record a mechanic's lien within 90 days after the last
date on which work was performed or materials were furnished.
9. Which of the following is considered a primary legal benefit of forming a Nevada Limited Liability
Company (LLC) for a contracting business?
A. Avoiding all state and local taxes.
B. Complete exemption from the State Contractors Board's licensing requirements.
C. Limited liability for the owners, protecting personal assets from business debts and judgments.
D. The ability to operate without any formal business records or meetings.
🟢C
🔴 Explanation: The primary advantage of an LLC is the limited liability protection it affords its
members. This means that members' personal assets are generally shielded from the company's debts
and liabilities, including lawsuits arising from construction projects. LLCs are still subject to taxation
and licensing requirements and must maintain formal records.
10. A contractor notices an error in their bid after it has been submitted and accepted. The bid is
significantly lower due to a mathematical mistake. What is the contractor's best course of action?
A. Refuse to sign the contract.
B. Notify the owner immediately and request to cancel the contract due to a material mistake.
C. Proceed with the project at the lower bid and absorb the loss.
D. File a claim with the State Contractors Board.
🟢B
🔴 Explanation: Under contract law, a unilateral mistake (one party's mistake) may be grounds to
rescind (cancel) the contract if the mistake is material, it goes to the heart of the contract, and the
other party knew or should have known of the mistake. A significant mathematical error in a bid is a
classic example. The contractor must notify the owner promptly and in good faith.
