Michigan Residential Builders License Practice Test

What is one potential consequence of a contractor's intent to defraud?

1. Increased project funding

2. Legal penalties and fines

3. Public recognition

4. Extended business hours

The correct answer is: Legal penalties and fines

A contractor's intent to defraud carries serious consequences, one of which is facing legal penalties and fines. Engaging in fraudulent activities undermines the trust essential in the construction industry and violates numerous laws and regulations. When a contractor is found to have intent to defraud, they can be prosecuted under civil or criminal law, leading to substantial financial penalties imposed by the court, which can diminish their financial stability and professional reputation. This outcome not only affects the contractor directly but also impacts homeowners and other stakeholders involved in the construction project, as it can lead to loss of investments, increased project costs, and potential legal disputes. Other outcomes, such as increased project funding, public recognition, or extended business hours, are unlikely to occur as a result of fraudulent intent. Instead, the repercussions are predominantly negative, focusing on legal consequences and the potential for reputational damage in the industry.