Utah Contractor Practice Exam

In most construction contracts, retention may be held for up to how many days as a guarantee that the prime pays the subcontractors and suppliers?

1. 10

2. 30

3. 60

4. 90

The correct answer is: 60

Retention in construction contracts serves as a financial safeguard to ensure that the prime contractor fulfills its obligations to pay subcontractors and suppliers. The purpose of retention is to protect stakeholders in the construction project by withholding a portion of the contract payment until certain conditions are met, such as the completion of the project, resolving any disputes, and ensuring satisfactory work. In Utah, it is common practice to allow retention to be held for up to 60 days after the completion of the work. This duration gives the prime contractor sufficient time to settle any outstanding issues with subcontractors and suppliers while still providing a reasonable timeframe for the project’s finalization. The other options, while they could represent timeframes in different contexts or contractual arrangements, do not align with the standard practice for retention periods in construction contracts in Utah. Specifically, shorter periods like 10 or 30 days may not provide enough time for all parties to resolve any lingering matters, while a longer period like 90 days could unnecessarily delay payments and create cash flow problems for subcontractors. Thus, the 60-day period maintains a balance between protecting interests and ensuring timely payment.