Alabama Electrical Contractor Business and Law Exam

Project overhead costs are job-specific items such as bonds, temporary storage, temporary office, security guard, utilities, dumpsters and portable toilets, while company overhead covers business-wide costs such as office rent, accounting fees and legal fees.

The unit price method bundles labor, materials, equipment and subcontractors into a single price for the entire task, while the quantity take-off method estimates each component individually.

Addenda are changes issued before the contract is awarded (and become part of the bid documents and later the contract), while modifications are changes made after the contract is signed and executed.

In arbitration a third-party arbitrator acts as a judge and renders an award that legally binds all parties, while in mediation a neutral mediator only facilitates dialogue and the parties themselves set the terms of any agreement.

Mediation uses an independent neutral third party to facilitate dialogue, while collaborative law has no neutral mediator or arbitrator—the parties negotiate a mutually beneficial result through their own advocates, usually lawyers.

Bid shopping is the general contractor approaching subcontractors other than those who bid to seek a lower offer than the original quotes, while bid peddling is a subcontractor approaching the general contractor after award offering to lower its bid-day price.

Bid rigging is collusion in which contractors coordinate their bids to fix the award outcome, whereas bid shopping and bid peddling involve seeking or offering lower prices after original bids are submitted or awarded.

Under a lump-sum contract the contractor completes the project for a predetermined price and assumes all risk, including unforeseen cost overruns, while under a cost-plus contract the owner reimburses actual labor and material costs plus a markup (percentage or fixed fee) for overhead and profit.

In a limited partnership the general partner has personal and unlimited liability for all business actions and debts, while a limited partner has no personal liability beyond the previously agreed-upon contribution or investment.

An LLC with one owner is taxed as a sole proprietorship, while an LLC with more than one owner may elect to be taxed as a partnership or as a corporate entity; LLCs are not taxed at the entity level unless they choose to be.

All-risk covers direct loss from any peril not specifically excluded by the policy (nearly all risks), while named peril has narrower coverage that lists the covered perils, such as fire and lightning.

Leasing requires no down payment, spreads lower payments over a longer period, allows lease payments as deductible operating expenses and returns obsolete equipment to the owner, while purchasing usually costs less in the long run and gives ownership/salvage value (leases generally cannot be cancelled).

They are mutually exclusive remedies—an owner who sues for liquidated damages (e.g., a contract's per-day amount times days late) cannot also sue for actual damages.