BACK TO BASICS CONTRACTING EXAM (SPRING 2026) QUESTIONS AND
ANSWERS WITH RATIONALES/GRADED A+/2026 UPDATE/100%
CORRECT /INSTANT DOWNLOAD
**Question 1**
A legally enforceable agreement between two or more parties is called a:
A. Memorandum of understanding
B. Contract ✓
C. Letter of intent
D. Change order
**Correct Answer: B ✓**
Rationale: A contract is a legally enforceable agreement between two or more parties that
creates mutual obligations. A memorandum of understanding (A) is often non-binding. A letter of
intent (C) expresses preliminary commitment but is usually not a binding contract. A change
order (D) modifies an existing contract.
---
**Question 2**
Which of the following is NOT an essential element of a valid contract?
A. Offer
B. Acceptance
C. Verbal promise only (no consideration) ✓
D. Consideration
**Correct Answer: C ✓**
,Rationale: Essential elements of a valid contract include offer, acceptance, consideration
(something of value exchanged), mutual assent, capacity, and legality. A verbal promise without
consideration is generally not enforceable. Consideration (D) is required.
---
**Question 3**
In a fixed-price (lump sum) contract, the contractor bears the risk of:
A. Cost overruns ✓
B. Changes in scope initiated by the owner
C. Unusually severe weather
D. Owner financing
**Correct Answer: A ✓**
Rationale: In a fixed-price contract, the contractor agrees to perform the work for a set price.
Any cost overruns (higher material, labor, or equipment costs) are borne by the contractor.
Changes in scope (B) initiated by the owner typically require a change order. Severe weather (C)
may be addressed by force majeure clauses.
---
**Question 4**
A change order is a written document that:
A. Cancels the entire contract
B. Modifies the original contract scope, price, or schedule ✓
C. Transfers ownership of the project
D. Terminates the contractor's license
**Correct Answer: B ✓**
, Rationale: A change order is a formal written document that modifies the original contract,
typically adding or deleting work, adjusting the contract price, or extending the completion date.
It does not cancel the contract (A) or transfer ownership (C). It is signed by both parties.
---
**Question 5**
Which type of contract reimburses the contractor for actual costs plus an additional amount for
overhead and profit?
A. Fixed-price contract
B. Time and materials contract
C. Cost-plus contract ✓
D. Unit price contract
**Correct Answer: C ✓**
Rationale: A cost-plus contract reimburses the contractor for allowable costs (labor, materials,
equipment, subcontractors) plus a fee (percentage or fixed amount) for overhead and profit.
Time and materials (B) also reimburses costs but typically with predetermined hourly rates and
material markup. Fixed-price (A) is a set price. Unit price (D) pays per measured unit of work.
---
**Question 6**
The prime contractor is ultimately responsible for:
A. Only their own work
B. The entire project, including work performed by subcontractors ✓
C. Only the owner's financing
D. Only the design
**Correct Answer: B ✓**
ANSWERS WITH RATIONALES/GRADED A+/2026 UPDATE/100%
CORRECT /INSTANT DOWNLOAD
**Question 1**
A legally enforceable agreement between two or more parties is called a:
A. Memorandum of understanding
B. Contract ✓
C. Letter of intent
D. Change order
**Correct Answer: B ✓**
Rationale: A contract is a legally enforceable agreement between two or more parties that
creates mutual obligations. A memorandum of understanding (A) is often non-binding. A letter of
intent (C) expresses preliminary commitment but is usually not a binding contract. A change
order (D) modifies an existing contract.
---
**Question 2**
Which of the following is NOT an essential element of a valid contract?
A. Offer
B. Acceptance
C. Verbal promise only (no consideration) ✓
D. Consideration
**Correct Answer: C ✓**
,Rationale: Essential elements of a valid contract include offer, acceptance, consideration
(something of value exchanged), mutual assent, capacity, and legality. A verbal promise without
consideration is generally not enforceable. Consideration (D) is required.
---
**Question 3**
In a fixed-price (lump sum) contract, the contractor bears the risk of:
A. Cost overruns ✓
B. Changes in scope initiated by the owner
C. Unusually severe weather
D. Owner financing
**Correct Answer: A ✓**
Rationale: In a fixed-price contract, the contractor agrees to perform the work for a set price.
Any cost overruns (higher material, labor, or equipment costs) are borne by the contractor.
Changes in scope (B) initiated by the owner typically require a change order. Severe weather (C)
may be addressed by force majeure clauses.
---
**Question 4**
A change order is a written document that:
A. Cancels the entire contract
B. Modifies the original contract scope, price, or schedule ✓
C. Transfers ownership of the project
D. Terminates the contractor's license
**Correct Answer: B ✓**
, Rationale: A change order is a formal written document that modifies the original contract,
typically adding or deleting work, adjusting the contract price, or extending the completion date.
It does not cancel the contract (A) or transfer ownership (C). It is signed by both parties.
---
**Question 5**
Which type of contract reimburses the contractor for actual costs plus an additional amount for
overhead and profit?
A. Fixed-price contract
B. Time and materials contract
C. Cost-plus contract ✓
D. Unit price contract
**Correct Answer: C ✓**
Rationale: A cost-plus contract reimburses the contractor for allowable costs (labor, materials,
equipment, subcontractors) plus a fee (percentage or fixed amount) for overhead and profit.
Time and materials (B) also reimburses costs but typically with predetermined hourly rates and
material markup. Fixed-price (A) is a set price. Unit price (D) pays per measured unit of work.
---
**Question 6**
The prime contractor is ultimately responsible for:
A. Only their own work
B. The entire project, including work performed by subcontractors ✓
C. Only the owner's financing
D. Only the design
**Correct Answer: B ✓**
