AFSB 152 STUDY GUIDE 2026 QUESTIONS AND SOLUTIONS
RATED A+
✔✔Joint Venture - ✔✔A business association formed by an express or implied
agreement of two or more persons (including corporations) to accomplish a particular
project, such as the construction of a building.
✔✔open joint venture - ✔✔An undertaking whose parties intend to disclose to others
that a joint venture exists
✔✔Silent joint venture - ✔✔An undertaking in which the parties by agreement do not
intend to disclose to others that a joint venture exists
✔✔Limited joint venture - ✔✔an undertaking in which the parties by agreement limit
either the type of work to be performed or the amount of financial participation
✔✔Indemnity agreement - ✔✔A contract under which one party (the indemnitor) agrees
to reimburse a second party (the indemnitee) for lossess that the indemnitee has
already paid
✔✔Fixed-price contract (lump-sum contract) - ✔✔An agreement that specifies the
amount the contractor will receive for performing and completing the contract
✔✔Changes Clause - ✔✔A contract provision that enables an owner to make changes
and modifications to the work
✔✔Unit-price contract - ✔✔An agreement that divides a contract into various quantities
of work categories for the contractor to perform
✔✔Cost-plus Contract - ✔✔An agreement that provides payment to the contractor for
the cost of the work plus an amount for overhead and profit
✔✔Cost-plus with a guaranteed maximum price - ✔✔A cost-plus contract that has a
ceiling price on the amount the OWNER will pay for the completed project
✔✔Sharing Clause - ✔✔A contract provision that fixes the cost for completing the
contract and provides a sharing arrangement between the contractor and the owner for
completing the contract below the target cost.
✔✔Litigation - ✔✔a formal lawsuit that seeks damages
✔✔Mediation - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a mutually
agreeable settlement
, ✔✔Arbitration - ✔✔an alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding
✔✔Strike clause - ✔✔the contract provision that enables a contractor to seek a time
extension if labor disputes delay the work
✔✔National Labor Relations Act (NLRA) - ✔✔A law that prohibits union action for
certain acts or objectives
✔✔Force majeure clause - ✔✔a contract provision that protects parties who cannot
perform contractual obligations because of causes outside their control
✔✔Price escalation clause - ✔✔A contract provision that enables a contractor to make
a claim against an owner for increases costs beyond the original bid because of an
unforeseen event.
✔✔pay-when-paid clause - ✔✔A contract provision that requires payment for the
subcontractor's work at the same time the prime contractor receives payment from the
project owner.
✔✔Rock Clause - ✔✔A contract provision that requires the contractor to establish a
fixed price per cubic yard for excavated rock
✔✔Time for completion clause - ✔✔A contract provision that specifies the number of
days in which the construction must reach completion
✔✔Material breach of contract - ✔✔Violation of the agreement that would justify an
owner's termination of the contract
✔✔Time is of the essence provision - ✔✔A contract clause that specifies that time is
critical for completion of the project
✔✔Liquidated damages - ✔✔a reasonable estimation of actual damages, agreed to by
contracting parties and included in the contract, to be paid in the event of a breach or for
negligence.
✔✔progress payment - ✔✔A periodic or percentage installment payment for service
✔✔Bonus Clause - ✔✔A contract provision that provides an incentive payment for
exemplary performance
RATED A+
✔✔Joint Venture - ✔✔A business association formed by an express or implied
agreement of two or more persons (including corporations) to accomplish a particular
project, such as the construction of a building.
✔✔open joint venture - ✔✔An undertaking whose parties intend to disclose to others
that a joint venture exists
✔✔Silent joint venture - ✔✔An undertaking in which the parties by agreement do not
intend to disclose to others that a joint venture exists
✔✔Limited joint venture - ✔✔an undertaking in which the parties by agreement limit
either the type of work to be performed or the amount of financial participation
✔✔Indemnity agreement - ✔✔A contract under which one party (the indemnitor) agrees
to reimburse a second party (the indemnitee) for lossess that the indemnitee has
already paid
✔✔Fixed-price contract (lump-sum contract) - ✔✔An agreement that specifies the
amount the contractor will receive for performing and completing the contract
✔✔Changes Clause - ✔✔A contract provision that enables an owner to make changes
and modifications to the work
✔✔Unit-price contract - ✔✔An agreement that divides a contract into various quantities
of work categories for the contractor to perform
✔✔Cost-plus Contract - ✔✔An agreement that provides payment to the contractor for
the cost of the work plus an amount for overhead and profit
✔✔Cost-plus with a guaranteed maximum price - ✔✔A cost-plus contract that has a
ceiling price on the amount the OWNER will pay for the completed project
✔✔Sharing Clause - ✔✔A contract provision that fixes the cost for completing the
contract and provides a sharing arrangement between the contractor and the owner for
completing the contract below the target cost.
✔✔Litigation - ✔✔a formal lawsuit that seeks damages
✔✔Mediation - ✔✔An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a mutually
agreeable settlement
, ✔✔Arbitration - ✔✔an alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a settlement,
which can be final and binding
✔✔Strike clause - ✔✔the contract provision that enables a contractor to seek a time
extension if labor disputes delay the work
✔✔National Labor Relations Act (NLRA) - ✔✔A law that prohibits union action for
certain acts or objectives
✔✔Force majeure clause - ✔✔a contract provision that protects parties who cannot
perform contractual obligations because of causes outside their control
✔✔Price escalation clause - ✔✔A contract provision that enables a contractor to make
a claim against an owner for increases costs beyond the original bid because of an
unforeseen event.
✔✔pay-when-paid clause - ✔✔A contract provision that requires payment for the
subcontractor's work at the same time the prime contractor receives payment from the
project owner.
✔✔Rock Clause - ✔✔A contract provision that requires the contractor to establish a
fixed price per cubic yard for excavated rock
✔✔Time for completion clause - ✔✔A contract provision that specifies the number of
days in which the construction must reach completion
✔✔Material breach of contract - ✔✔Violation of the agreement that would justify an
owner's termination of the contract
✔✔Time is of the essence provision - ✔✔A contract clause that specifies that time is
critical for completion of the project
✔✔Liquidated damages - ✔✔a reasonable estimation of actual damages, agreed to by
contracting parties and included in the contract, to be paid in the event of a breach or for
negligence.
✔✔progress payment - ✔✔A periodic or percentage installment payment for service
✔✔Bonus Clause - ✔✔A contract provision that provides an incentive payment for
exemplary performance
