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MT General Contractor: Contracting Law and Contracts

MT General Contractor · Work through your exam, one topic at a time.

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Contracting Law and Contracts

What this domain tests

Contract formation and interpretation, standard documents, changes, payment, delay, and dispute resolution under Montana law.

Core rules

  • Formation requires offer, acceptance, consideration, and capacity. Montana's statute of frauds (MCA 28-2-903) requires a writing for land interests and contracts not performable within one year.
  • Standard forms (AIA A101/A201, ConsensusDocs) allocate risk. Read incorporated documents and the order of precedence.
  • Changes should be written; a written owner directive can still support a constructive change claim.
  • Montana prompt-payment and retainage statutes govern timing; public work adds prevailing-wage and payment-bond rules.
  • Pay-if-paid makes owner payment a condition precedent; pay-when-paid is only a timing provision. Courts construe both strictly.
  • Every Montana contract carries the implied covenant of good faith and fair dealing.

Worked example

A subcontract states the sub is paid "within 10 days after the contractor receives payment from the owner." The owner withholds for a dispute unrelated to the sub. If the clause is pay-when-paid, the sub's payment is delayed, not eliminated. A true pay-if-paid clause must say payment is a condition precedent. The sub should give notice and protect lien rights rather than wait.

Traps

Signing an AIA form without completing supplements; missing claim-notice deadlines; assuming oral changes are always void; confusing pay-if-paid with pay-when-paid; ignoring flow-down clauses.