Arizona Contractors License Practice Exam

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What happens to a construction contract if a material breach occurs?

The contract is automatically voided
The contract is still valid but can be challenged in court
The contract is modified without penalties
The contract is temporarily suspended

The correct answer is: The contract is still valid but can be challenged in court

When a material breach occurs in a construction contract, the contract remains valid; however, the party that has been affected by the breach may choose to challenge the breach in court. A material breach is significant enough to undermine the contract's overall purpose and can warrant legal action. In this context, the aggrieved party may seek remedies such as damages, specific performance, or the option to terminate the contract. While the operational aspects of the contract may be questioned due to the breach, it doesn't nullify the contract entirely. Consequently, this allows the injured party the opportunity to pursue legal avenues to address their grievances while keeping the contractual relationship technically intact until a resolution is achieved. Other options, such as voiding the contract automatically, modifying it without penalties, or temporarily suspending it, do not accurately capture the legal framework surrounding material breaches, as they do not reflect the ongoing validity and enforceability of the contract after such a serious issue arises.