CNST 420 EXAM 3 QUESTIONS AND ANSWERS
What is the Spearin doctrine? - CORRECT ANSWER✅✅Owner who furnishes design specifications
impliedly warrants they are adequate and buildable (Ch 16)
Spearin as a shield? - CORRECT ANSWER✅✅Defeats owner claim for defect caused by owner's own
defective specs (Ch 16)
Spearin as a sword? - CORRECT ANSWER✅✅Contractor can sue owner for extra costs/delays caused by
defective specs (Ch 16)
Two components of unconscionability defense? - CORRECT ANSWER✅✅(1) Procedural (surprise, fine
print) + (2) Substantive (shockingly one-sided) (Ch 16)
Three purposes of retainage? - CORRECT ANSWER✅✅(1) Security for correction of defects, (2) fund for
sub/supplier payment, (3) prevent overpayment (Ch 17)
Two situations for cardinal change? - CORRECT ANSWER✅✅(1) One-shot radical change, (2) aggregate
of many changes that transform the project (Ch 18)
Watson Lumber strategy for small extras on small jobs? - CORRECT ANSWER✅✅Put a
contingency/allowance line item in original bid instead of formal COs (Ch 18)
Advantages of DSC clause? - CORRECT ANSWER✅✅Lower bids (no huge contingencies), owner only
pays if actual difference occurs (Ch 19)
Disadvantages of DSC clause? - CORRECT ANSWER✅✅Uncertain final price, higher admin cost, disputes
over "materially differs" (Ch 19)
Primary purpose of force majeure clause? - CORRECT ANSWER✅✅Excuse performance & avoid breach
when extraordinary events beyond control occur (Ch 20)
, Common force majeure examples? - CORRECT ANSWER✅✅Acts of God, war, terrorism, pandemic,
strikes, gov't orders (Ch 20)
Four elements of promissory estoppel (Drennan)? - CORRECT ANSWER✅✅(1) Clear offer, (2)
reasonable & foreseeable reliance, (3) actual & substantial reliance, (4) injustice only avoided by
enforcement (Ch 21)
Five Restatement §241 factors for material breach? - CORRECT ANSWER✅✅(1) Deprivation of expected
benefit, (2) adequacy of compensation, (3) forfeiture, (4) likelihood of cure, (5) good faith (Ch 22)
Primary purpose of CGL insurance? - CORRECT ANSWER✅✅Third-party bodily injury & property
damage claims (including defense costs) (Ch 24-25)
Primary purpose of payment bond? - CORRECT ANSWER✅✅Guarantee subs & suppliers get paid;
protect owner from liens (required on public jobs) (Ch 24-25)
AIA A201 §14.1 - Contractor termination triggers? - CORRECT ANSWER✅✅Non-payment >30 days,
owner fails proof of financing, repeated interruptions >120 days/yr (Ch 22)
AIA A201 §14.2 - Owner termination for cause grounds? - CORRECT ANSWER✅✅Repeated failure
workers/materials, non-payment subs, disregard laws, material breach (Ch 22)
AIA §14.4 - Termination for convenience payment? - CORRECT ANSWER✅✅Work executed +
termination expenses + fee if stated in contract (NO profit on unperformed work) (Ch 22)
Pay-when-paid vs Pay-if-paid difference? - CORRECT ANSWER✅✅PWP = timing; PIP = absolute
condition (often unenforceable) (Ch 21)
Severin doctrine? - CORRECT ANSWER✅✅Prime cannot pass-through sub claim to owner if prime has
no liability to sub (Ch 21)
What is the Spearin doctrine? - CORRECT ANSWER✅✅Owner who furnishes design specifications
impliedly warrants they are adequate and buildable (Ch 16)
Spearin as a shield? - CORRECT ANSWER✅✅Defeats owner claim for defect caused by owner's own
defective specs (Ch 16)
Spearin as a sword? - CORRECT ANSWER✅✅Contractor can sue owner for extra costs/delays caused by
defective specs (Ch 16)
Two components of unconscionability defense? - CORRECT ANSWER✅✅(1) Procedural (surprise, fine
print) + (2) Substantive (shockingly one-sided) (Ch 16)
Three purposes of retainage? - CORRECT ANSWER✅✅(1) Security for correction of defects, (2) fund for
sub/supplier payment, (3) prevent overpayment (Ch 17)
Two situations for cardinal change? - CORRECT ANSWER✅✅(1) One-shot radical change, (2) aggregate
of many changes that transform the project (Ch 18)
Watson Lumber strategy for small extras on small jobs? - CORRECT ANSWER✅✅Put a
contingency/allowance line item in original bid instead of formal COs (Ch 18)
Advantages of DSC clause? - CORRECT ANSWER✅✅Lower bids (no huge contingencies), owner only
pays if actual difference occurs (Ch 19)
Disadvantages of DSC clause? - CORRECT ANSWER✅✅Uncertain final price, higher admin cost, disputes
over "materially differs" (Ch 19)
Primary purpose of force majeure clause? - CORRECT ANSWER✅✅Excuse performance & avoid breach
when extraordinary events beyond control occur (Ch 20)
, Common force majeure examples? - CORRECT ANSWER✅✅Acts of God, war, terrorism, pandemic,
strikes, gov't orders (Ch 20)
Four elements of promissory estoppel (Drennan)? - CORRECT ANSWER✅✅(1) Clear offer, (2)
reasonable & foreseeable reliance, (3) actual & substantial reliance, (4) injustice only avoided by
enforcement (Ch 21)
Five Restatement §241 factors for material breach? - CORRECT ANSWER✅✅(1) Deprivation of expected
benefit, (2) adequacy of compensation, (3) forfeiture, (4) likelihood of cure, (5) good faith (Ch 22)
Primary purpose of CGL insurance? - CORRECT ANSWER✅✅Third-party bodily injury & property
damage claims (including defense costs) (Ch 24-25)
Primary purpose of payment bond? - CORRECT ANSWER✅✅Guarantee subs & suppliers get paid;
protect owner from liens (required on public jobs) (Ch 24-25)
AIA A201 §14.1 - Contractor termination triggers? - CORRECT ANSWER✅✅Non-payment >30 days,
owner fails proof of financing, repeated interruptions >120 days/yr (Ch 22)
AIA A201 §14.2 - Owner termination for cause grounds? - CORRECT ANSWER✅✅Repeated failure
workers/materials, non-payment subs, disregard laws, material breach (Ch 22)
AIA §14.4 - Termination for convenience payment? - CORRECT ANSWER✅✅Work executed +
termination expenses + fee if stated in contract (NO profit on unperformed work) (Ch 22)
Pay-when-paid vs Pay-if-paid difference? - CORRECT ANSWER✅✅PWP = timing; PIP = absolute
condition (often unenforceable) (Ch 21)
Severin doctrine? - CORRECT ANSWER✅✅Prime cannot pass-through sub claim to owner if prime has
no liability to sub (Ch 21)
