Georgia Business & Law Exam (Residential and General Contractors)

Addenda are changes made to bid documents before the contract is awarded, while modifications are changes made after the contract is signed and executed.

Bid peddling is initiated by a subcontractor approaching the general contractor after award to offer a lower price, while bid shopping is initiated by the general contractor seeking lower prices from subcontractors after original bids are submitted.

Bid rigging is collusion among contractors to coordinate bids and fix the award outcome, while bid peddling is a single subcontractor undercutting the winning bid after project award.

Arbitration results in a legally binding decision rendered by a third-party arbitrator, while mediation uses a neutral facilitator to help parties reach a mutual agreement that the parties themselves set the terms for.

In a lump-sum contract the contractor accepts all risk for cost overruns at a predetermined price, while in a cost-plus contract the owner reimburses all actual costs plus a fixed fee for overhead and profit.

A unit-price contract is used when exact quantities cannot be determined in advance and payment is based on actual units used, while a lump-sum contract sets one fixed price for the entire project regardless of actual costs.

The unit price method bundles all cost factors (labor, materials, equipment, subcontractors) into one price per unit of work, while the quantity take-off method estimates each cost component individually.

Project overhead costs are tied directly to a specific job (e.g., temporary storage, portable toilets, bonds), while company overhead costs are general business expenses not tied to a specific project (e.g., office rent, accounting fees, legal fees).

All-risk coverage covers direct loss from any peril not specifically excluded, while named peril coverage is narrower and only covers perils explicitly listed in the policy.

A C Corporation faces double taxation on profits and dividends, while an S Corporation passes income through to shareholders and is limited to no more than 100 shareholders who are U.S. citizens or legal residents.

Design/build uses one firm to handle design through completed construction under a single contract, while fast-track construction begins construction before contract documents are complete using a phased approach with no fixed cost until later.

Liquidated damages are a pre-agreed per-day penalty for late completion, and an owner who pursues them cannot also sue for actual damages — the two remedies are mutually exclusive.