South Carolina Business Management and Law Exam

In mediation a neutral third party facilitates dialogue but renders no binding decision, while in arbitration the arbitrator or panel acts as a judge and renders a legally binding decision.

A material breach is a serious contract violation that may void the contract and likely leads to litigation, while an immaterial breach is less serious, does not terminate the contract, and limits the injured party to suing only for the value of damages.

All-risk policies cover direct loss from all perils not specifically excluded, while named peril policies only cover the perils explicitly listed in the policy.

Bid peddling occurs when a subcontractor approaches the general contractor after award to undercut the original bid price, while bid shopping is when the general contractor seeks lower prices from other subcontractors after bids are submitted.

A lump-sum contract fixes a predetermined price with the contractor bearing all cost-overrun risk, while fast-track construction begins before contract documents are complete and the cost is not fixed until after some construction commitments are already made.

Project overhead costs are items necessary to complete a specific project (e.g., temporary storage, bonds, dumpsters) but not direct labor or materials, while company overhead costs are general business expenses (e.g., office rent, accounting fees) that cannot be linked to any specific project.

Direct costs are directly linked to a particular project such as materials, subcontractor fees, and labor, while operating expenses are general indirect costs of running the business such as selling expenses and fixed overhead.

Leasing requires no down payment, spreads payments over a longer period, and allows return of obsolete equipment, while purchasing typically costs less in the long run and provides ownership and salvage value.

A sole proprietorship exposes the owner to unlimited personal liability and terminates upon the owner's death, while a C Corporation provides limited liability but is subject to double taxation on profits and shareholder dividends.

An addendum is issued to communicate changes to a bid package before the contract is awarded and becomes part of the bid documents, while a change order is a written agreement executed after the contract is signed to modify the scope, price, or schedule.

MACRS determines depreciation by applying a percentage rate based on the date put in service, cost, recovery period, convention, and depreciation method, and does not use salvage value, while straight-line depreciation does use salvage value.

Corporations must make estimated tax payments when expected owed tax is $500 or more, while sole proprietors, partners, and S corporation shareholders have a higher threshold of $1,000.