Business Management and Law
Core concepts
A licensed contractor in Arizona operates inside a web of contract law, licensing rules, and business formalities. Know the difference between a contract (offer, acceptance, consideration) and a change order (a written modification signed by an authorized party). Understand lien rights under Arizona's mechanics' lien statutes: a party who furnishes labor, materials, or professional services may lien the improved property if notice and timing requirements are met, and a 20-day preliminary notice is the classic trap - questions often test whether a subcontractor preserved lien rights without it.
Traps to watch
- Agency: a project superintendent usually lacks authority to bind the company to a major change; only the person with actual or apparent authority can.
- Substantial vs. final completion drives retainage release, warranty start, and lien deadlines - do not conflate them.
- Indemnity vs. insurance: indemnity shifts liability; insurance funds it. A certificate of insurance is not proof of coverage scope.
- Prompt payment / retainage statutes: know that withholding must be justified and timely.
Rule of thumb
Treat any verbal direction that changes scope, price, or schedule as unenforceable until confirmed in writing. A quick sanity check: who signed, what changed, and is it in the contract documents? If any answer is missing, issue a written confirmation before proceeding.
Worked example
A subcontractor begins work March 1 and is never paid. The prime's contract requires written notice of claims within 7 days of the event. The sub gave none. The sub's lien rights may still exist under statute, but its contract claim against the prime is likely barred by the notice provision. Lesson: statutory rights and contractual rights run on separate clocks.