Construction Law, Ethics, and Professional Practice
Domain 7 tests legal and ethical practice: contract formation, breach, warranties, liens, payment, insurance, indemnity, licensing, confidentiality, conflicts of interest, and dispute resolution. The exam favors written documentation and fair dealing.
Core rules
- Know the contract terms that control notice, changes, payment, termination, and dispute resolution. Missing a notice deadline can waive a claim.
- Preserve lien and bond rights by meeting statutory deadlines and serving required notices.
- Warranties are express or implied; do not promise more than the contract and product data support.
- Carry required insurance and verify subcontractor coverage. Indemnity clauses allocate risk but do not replace safety duties.
- Avoid bid shopping, conflicts of interest, and misuse of another firm's pricing. Keep client and bid information confidential.
Worked example
An owner orally directs an extra finish coat after the contract was signed. The contractor wants to preserve the relationship but also wants payment. The correct response is to confirm the direction in writing, state the added labor, material, and schedule impact, and obtain a written change order before proceeding unless an emergency requires immediate action. If work must proceed, document the oral direction and confirm it the same day. The reasoning: oral changes are difficult to prove, and written notice protects both payment and quality expectations.
Traps
- Relying on a handshake change.
- Missing lien or preliminary notice deadlines.
- Backcharging a subcontractor without notice and evidence.
- Using a competitor's bid to pressure a supplier.
- Giving legal advice beyond your role.