NASCLA UPDATED ACTUAL Questions and CORRECT Answers
1. Performance Guarantees that the contractor will complete a contract with in its time frame and
Bond conditions
2. Payment Bonds Guarantees subcontractors and suppliers that they will be paid for work if they
perform properly under a contract
3. Maintenance Guarantees that for stated Typically one year no defective workmanship or mate-
bond rial will appear in the completed project
4. Completion bond Provide assurance to the financial backers have a construction project but it will
be completed on time
5. Fidelity bond Covers business owners for losses due to dishonest act by there employees
6. Lien bond Guarantees that liens cannot be placed against the owners property by contrac-
tors for payment of service
7. Sub contractors Protects the general contractor in the event that subcontractors do not fully
bond perform the contract and or pay for labor and materials
8. Bank letter of Is not a Bond but is it cash guaranteed to the owner it is not a guarantee of
credit performance but can be converted to a payment to the owner by a bank or lending
institution
9. Bid bond Guarantees that the contractor if awarded the job will do the work at the sub-
mitted bid price enter into a contract with the owner and furnish the required
performance and payment bonds
10. What is a bond Bonds provide protection in the event that the contractual obligation's are not met
11. Bond language At a minimum Bond should contain the total dollar amount length of the bond
requirements for notice of the fact or lack of maintenance and bond enforcement
12. Filing procedures
, NASCLA UPDATED ACTUAL Questions and CORRECT Answers
Construction law contractual relationships govern the bond claims process the
filing process as outlined in the bond
13. Project changes Unless specifically outlined in the bonds agreement the Surety company will
not cover changes to the original contract in most cases request for additional
coverage must be made and the bonding company must be notified of the
contract changes
14. Payment in the In the event of default Surety may provide additional finances arrange for a new
event of default contractor or hire subcontractors to complete the work or pay out the amount of
the bond
15. Miller act of 1935 Current law requiring performance and payment bond on a federal construction
project value greater than $100,000
16. Miller act 50% on contracts less than 1 million 40% of contracts between one and 5 million
amounts 2.5 million payment bond for contracts in excess of 5 million
17. Little Miller act Similar to the Miller act for public works projects
18. Construction In- Addendum to the miller act it's purpose is to improve payment bond protections
dustry payment for persons who furnish labor or material for use on federal construction projects
protection act of to help subcontractors with adequate protection
1999
19. All risk builders A form of property insurance that covers property owners and builders for build-
risk insurance ings under construction
20. All risk coverage Provides for Direct loss by these perils that are not specifically excluded by
the policy it generally provides coverage for all risks including theft vandalism
accidental loss and damages or distraction
21. A subrogation Occurs when the insurance company pays the insured for damages or loss and
clause then sues the negligent third-party to pay for the loss
1. Performance Guarantees that the contractor will complete a contract with in its time frame and
Bond conditions
2. Payment Bonds Guarantees subcontractors and suppliers that they will be paid for work if they
perform properly under a contract
3. Maintenance Guarantees that for stated Typically one year no defective workmanship or mate-
bond rial will appear in the completed project
4. Completion bond Provide assurance to the financial backers have a construction project but it will
be completed on time
5. Fidelity bond Covers business owners for losses due to dishonest act by there employees
6. Lien bond Guarantees that liens cannot be placed against the owners property by contrac-
tors for payment of service
7. Sub contractors Protects the general contractor in the event that subcontractors do not fully
bond perform the contract and or pay for labor and materials
8. Bank letter of Is not a Bond but is it cash guaranteed to the owner it is not a guarantee of
credit performance but can be converted to a payment to the owner by a bank or lending
institution
9. Bid bond Guarantees that the contractor if awarded the job will do the work at the sub-
mitted bid price enter into a contract with the owner and furnish the required
performance and payment bonds
10. What is a bond Bonds provide protection in the event that the contractual obligation's are not met
11. Bond language At a minimum Bond should contain the total dollar amount length of the bond
requirements for notice of the fact or lack of maintenance and bond enforcement
12. Filing procedures
, NASCLA UPDATED ACTUAL Questions and CORRECT Answers
Construction law contractual relationships govern the bond claims process the
filing process as outlined in the bond
13. Project changes Unless specifically outlined in the bonds agreement the Surety company will
not cover changes to the original contract in most cases request for additional
coverage must be made and the bonding company must be notified of the
contract changes
14. Payment in the In the event of default Surety may provide additional finances arrange for a new
event of default contractor or hire subcontractors to complete the work or pay out the amount of
the bond
15. Miller act of 1935 Current law requiring performance and payment bond on a federal construction
project value greater than $100,000
16. Miller act 50% on contracts less than 1 million 40% of contracts between one and 5 million
amounts 2.5 million payment bond for contracts in excess of 5 million
17. Little Miller act Similar to the Miller act for public works projects
18. Construction In- Addendum to the miller act it's purpose is to improve payment bond protections
dustry payment for persons who furnish labor or material for use on federal construction projects
protection act of to help subcontractors with adequate protection
1999
19. All risk builders A form of property insurance that covers property owners and builders for build-
risk insurance ings under construction
20. All risk coverage Provides for Direct loss by these perils that are not specifically excluded by
the policy it generally provides coverage for all risks including theft vandalism
accidental loss and damages or distraction
21. A subrogation Occurs when the insurance company pays the insured for damages or loss and
clause then sues the negligent third-party to pay for the loss
