NASCLA Test Questions
and Complete Solutions
Graded A+
Performance Bond - Answer: Guarantees that the contractor will complete a contract with in its time
frame and conditions
Payment Bonds - Answer: Guarantees subcontractors and suppliers that they will be paid for work if
they perform properly under a contract
Maintenance bond - Answer: Guarantees that for stated Typically one year no defective workmanship or
material will appear in the completed project
Completion bond - Answer: Provide assurance to the financial backers have a construction project but it
will be completed on time
Fidelity bond - Answer: Covers business owners for losses due to dishonest act by there employees
Lien bond - Answer: Guarantees that liens cannot be placed against the owners property by contractors
for payment of service
Sub contractors bond - Answer: Protects the general contractor in the event that subcontractors do not
fully perform the contract and or pay for labor and materials
Bank letter of credit - Answer: Is not a Bond but is it cash guaranteed to the owner it is not a guarantee
of performance but can be converted to a payment to the owner by a bank or lending institution
, Bid bond - Answer: Guarantees that the contractor if awarded the job will do the work at the submitted
bid price enter into a contract with the owner and furnish the required performance and payment
bonds
What is a bond - Answer: Bonds provide protection in the event that the contractual obligation's are not
met
Bond language - Answer: 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
Filing procedures - Answer: Construction law contractual relationships govern the bond claims process
the filing process as outlined in the bond
Project changes - Answer: 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
Payment in the event of default - Answer: In the event of default Surety may provide additional finances
arrange for a new contractor or hire subcontractors to complete the work or pay out the amount of the
bond
Miller act of 1935 - Answer: Current law requiring performance and payment bond on a federal
construction project value greater than $100,000
Miller act amounts - Answer: 50% on contracts less than 1 million 40% of contracts between one and 5
million 2.5 million payment bond for contracts in excess of 5 million
Little Miller act - Answer: Similar to the Miller act for public works projects
Construction Industry payment protection act of 1999 - Answer: Addendum to the miller act it's purpose
is to improve payment bond protections for persons who furnish labor or material for use on federal
construction projects to help subcontractors with adequate protection
and Complete Solutions
Graded A+
Performance Bond - Answer: Guarantees that the contractor will complete a contract with in its time
frame and conditions
Payment Bonds - Answer: Guarantees subcontractors and suppliers that they will be paid for work if
they perform properly under a contract
Maintenance bond - Answer: Guarantees that for stated Typically one year no defective workmanship or
material will appear in the completed project
Completion bond - Answer: Provide assurance to the financial backers have a construction project but it
will be completed on time
Fidelity bond - Answer: Covers business owners for losses due to dishonest act by there employees
Lien bond - Answer: Guarantees that liens cannot be placed against the owners property by contractors
for payment of service
Sub contractors bond - Answer: Protects the general contractor in the event that subcontractors do not
fully perform the contract and or pay for labor and materials
Bank letter of credit - Answer: Is not a Bond but is it cash guaranteed to the owner it is not a guarantee
of performance but can be converted to a payment to the owner by a bank or lending institution
, Bid bond - Answer: Guarantees that the contractor if awarded the job will do the work at the submitted
bid price enter into a contract with the owner and furnish the required performance and payment
bonds
What is a bond - Answer: Bonds provide protection in the event that the contractual obligation's are not
met
Bond language - Answer: 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
Filing procedures - Answer: Construction law contractual relationships govern the bond claims process
the filing process as outlined in the bond
Project changes - Answer: 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
Payment in the event of default - Answer: In the event of default Surety may provide additional finances
arrange for a new contractor or hire subcontractors to complete the work or pay out the amount of the
bond
Miller act of 1935 - Answer: Current law requiring performance and payment bond on a federal
construction project value greater than $100,000
Miller act amounts - Answer: 50% on contracts less than 1 million 40% of contracts between one and 5
million 2.5 million payment bond for contracts in excess of 5 million
Little Miller act - Answer: Similar to the Miller act for public works projects
Construction Industry payment protection act of 1999 - Answer: Addendum to the miller act it's purpose
is to improve payment bond protections for persons who furnish labor or material for use on federal
construction projects to help subcontractors with adequate protection
