In the described contract scenario, how much is the retention?

In the described contract scenario, how much is the retention?

• A. 500
• B. 1000
• C. 9000
• D. 10000

Answer: (B)

Retention is the portion of payment held back by the client to ensure the work is completed properly and any warranty items are fixed. It’s usually a percentage of the contract value or each progress payment. In this scenario, the contract value is $10,000 and the retention rate is 10%, so the amount kept back is $1,000. This aligns with common practice: a ten percent hold on payments until substantial completion and final acceptance, after which the retention is released (subject to any deductions for incomplete work or defects). A much smaller hold, like $500, would require a 5% rate, while a much larger hold, such as $9,000 or $10,000, would imply a much higher rate or a different contract value, which doesn’t fit the given terms.

Retention is the portion of payment held back by the client to ensure the work is completed properly and any warranty items are fixed. It’s usually a percentage of the contract value or each progress payment. In this scenario, the contract value is $10,000 and the retention rate is 10%, so the amount kept back is $1,000. This aligns with common practice: a ten percent hold on payments until substantial completion and final acceptance, after which the retention is released (subject to any deductions for incomplete work or defects). A much smaller hold, like $500, would require a 5% rate, while a much larger hold, such as $9,000 or $10,000, would imply a much higher rate or a different contract value, which doesn’t fit the given terms.