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A material breach goes to the root of the bargain: it deprives the other party of what it principally contracted for, and it therefore excuses that party's own further performance and lets it terminate. An immaterial breach entitles the injured party to damages but not to walk away — which is why 'the grout is the wrong shade' does not license an owner to stop paying. (d) is exactly that error; substantial performance with minor defects is compensated by the cost of correction, and Civil Code §3358 caps recovery at what full performance would have given. (b) sets the bar far too high: abandonment is one material breach among many, and B&P §7107 makes it separately disciplinable. (c) inverts the remedy — every breach, material or not, sounds in damages.

Civil Code §3300 sets the measure for breach of contract: the amount that will compensate the aggrieved party for all the detriment proximately caused, or which in the ordinary course of things would be likely to result — the benefit of the bargain, no more. (b) is punishment, which Civil Code §3294 reserves for obligations NOT arising from contract; a deliberate breach is compensated, not punished. (c) is restitution, a different measure that returns what was conferred, and it is the right one when a contract is rescinded rather than enforced. (d) states what §3358 forbids outright: no one may recover a greater amount than he would have gained by full performance.

The duty to mitigate requires the injured party to take reasonable steps to limit their losses after a breach, such as hiring a reasonable replacement contractor. Damages that could have been reasonably avoided are not recoverable. The owner need not act unreasonably or incur great expense, but sitting idle and letting losses pile up, or refusing reasonable replacements, can reduce the damages a court will award.

An unequivocal statement, before performance is due, that a party will not perform is an anticipatory repudiation. Civil Code §1440 provides that where a party gives notice before the other is in default that he will not perform, and does not retract it, the other party may enforce the obligation without first performing or offering to perform. The owner need not wait for the start date: he can treat the contract as breached now, engage a replacement and sue for the excess cost, or wait a reasonable time and see. (b) understates it — refusing the entire project goes to the essence of the bargain, which is what makes a breach material. (c) confuses repudiation with a lawful exit; rescission needs a ground under Civil Code §1689, and 'we changed our minds' is not one. (d) confuses a refusal to perform with an agreed change, which takes both signatures.

Under the substantial performance doctrine, a contractor who performs in good faith and completes the essential purpose of the contract, leaving only minor, non-material defects, may recover the contract price minus the cost to correct or complete those defects. Perfection is not required to recover. The owner is protected by the offset for the deficiencies rather than being able to escape paying anything at all.

Specific performance is an equitable remedy ordering a party to perform, granted only where money damages are inadequate, typically because the subject matter is unique, as with real estate, since each parcel of land is considered one of a kind. Courts rarely order specific performance of personal-service or ordinary construction work, both because money damages usually suffice and because supervising forced labor is impractical.

Rescission unmakes the contract. Civil Code §1689 lists the grounds — mistake, fraud, undue influence, duress or menace, failure of consideration, illegality — and Civil Code §1692 requires the rescinding party to restore everything of value received, so far as it can. It is an alternative to enforcing the bargain, not a way of winning it. (d) is specific performance, which does the opposite: it keeps the contract alive and compels performance. (c) is modification, governed by Civil Code §1698. (a) invents a doubling; contract damages under §3300 compensate, and §3358 forbids recovering more than full performance would have given. One consumer instance is worth holding onto: a timely cancellation under Civil Code §1689.6 is a statutory right of rescission that needs no ground at all.

A change order is a written amendment: it states the added or deleted scope, the amount added to or subtracted from the contract, and the effect on the payment schedule and the completion date. B&P §7159(c)(5) puts it plainly — a change-order form 'shall become part of the contract only if it is in writing and signed by the parties prior to the commencement of any work covered by a change order' — and §7159(e)(3) requires the contract itself to warn the buyer that an extra is unenforceable against him unless the change order identified all of that in advance. (c) is the practice the statute displaced, and the version that loses in a dispute. (a) is a termination or an abandonment, and abandonment without legal excuse is separately disciplinable under B&P §7107. (b) confuses the document that prevents a dispute with the proceeding that follows when there is none.

B&P §7159(d) requires a home improvement contract 'and any changes to the contract' to be in writing and signed by the parties BEFORE the work covered by the change order begins, and §7159(e)(3) requires the change order to identify, in advance and in writing, the scope of the work, the amount added to or subtracted from the contract, and the effect on the progress payments and the completion date. (d) is the most common real-world answer and the most expensive: an unsigned extra billed at the end is unenforceable against the buyer, and it is a standard way for a CSLB complaint to start. (a) leaves the contractor proving an oral agreement he was required to put in writing. (b) is the opposite error — contracts change constantly, and §7159 regulates how, not whether.

Quantum meruit is a restitutionary theory: where the owner requested and accepted a benefit, the contractor may recover the reasonable value of the work even with no enforceable agreement on price. On a home improvement job it is a fallback, not a substitute — B&P §7159(d) still requires a signed written change order before the changed work begins, and §7160 makes misrepresentation in obtaining the work a separate offense. (a) Specific performance compels a party to perform a promise already made; it cannot create a payment obligation where no enforceable price term exists. (b) Reformation corrects a writing that fails to reflect what the parties actually agreed — here there is no writing to correct. (d) Liquidated damages is a sum the parties fix IN the contract in advance as the measure of a breach; it cannot be invented afterwards for unbilled extras.

Between commercial parties an oral change order may still be enforceable — Civil Code §1698(b) lets an oral agreement modify a written contract to the extent it has been executed — but proving what was agreed is the whole problem, and the party carrying that burden usually loses. On HOME IMPROVEMENT work the rule is harder than 'risky': B&P §7159(d) requires the change to be in writing and signed BEFORE the changed work begins, and §7159(e)(3) makes the contract warn the buyer that an extra without such an order is unenforceable against him. (a) ignores both the proof problem and the statute. (c) confuses modification with novation, which requires everyone's intent to extinguish the old contract (Civil Code §1530). (d) is invented: public works status depends on public funds and a public awarding body, not on how a change was written down.

An express warranty is a promise or affirmation of fact the contractor actually makes about the work or the materials — 'this roof will be watertight for ten years' — and it binds because it was said, not because the law supplied it. (a) is the IMPLIED warranty, which arises by operation of law: on residential construction Civil Code §896 sets the standards a builder must meet, and §900 requires a one-year express written warranty on fit and finish. The relationship is the point — express warranties add to implied ones rather than replacing them, and Civil Code §1668 limits how far either can be disclaimed. (c) confuses a warranty with a perpetual guarantee; every warranty has a term, and the periods in §896 and §941 run regardless. (d) confuses a contractor's warranty with a manufacturer's product warranty; both can cover the same installed item.

Every construction contract carries an implied promise that the work will be done in a good and workmanlike manner — to the standard of a reasonably skilled contractor in that trade — whether or not anyone wrote it down. On residential construction the legislature made much of this explicit: Civil Code §896 sets specific standards covering everything from water intrusion to soils to noise transmission, and §900 adds a one-year express written warranty on fit and finish. (a) inverts the word 'implied'; a warranty that needed a separate signature would be an express one. (b) sets the bar at the owner's personal satisfaction, a taste standard the law does not import into ordinary construction. (c) confuses a quality warranty with a financial one — nothing guarantees the contractor's margin, or the owner's.

A statement of fact about the goods or the work — 'pressure-treated and rated for ground contact' — becomes an express warranty once the buyer relies on it; it binds because the contractor said it. (a) reaches for an implied warranty, which arises by operation of law rather than from anything anyone said, and it is wrong here precisely because there WAS a statement. (d) inverts the parol evidence rule: Code of Civil Procedure §1856(g) preserves evidence of fraud and misrepresentation, and a warranty the contractor actually gave is not outside evidence contradicting the writing. (b) misapplies the Statute of Frauds, which decides which contracts need a writing (Civil Code §1624), not whether a spoken warranty binds. Where the misstatement was knowing, B&P §7160 adds a $500 penalty and attorney's fees on top of the warranty claim.

A lump sum buys a result, not an accounting: the contractor names one price for a defined scope, keeps whatever it saves and absorbs whatever it overspends. That is why the scope clause matters more here than anywhere else, and why work outside it is a compensable extra rather than part of the deal. (b) is cost-plus, which puts the cost risk on the owner — which is exactly why a real cost-plus contract normally adds a guaranteed maximum price and an audit right. (c) is unit pricing, which shifts quantity risk to the owner but leaves productivity risk with the contractor. (d) is time and materials, which moves both. On residential work B&P §7159(d)(5) requires the contract amount in dollars and cents whichever structure is chosen.

A cost-plus contract reimburses documented cost and adds a fee — a percentage of cost, or a fixed fee that does not grow when the cost does. It shifts cost risk to the owner, which is why it normally arrives with a guaranteed maximum price, an audit right, and a defined list of what counts as cost and what the fee already covers. (c) is the lump-sum contract, the opposite allocation: the contractor keeps the saving and absorbs the overrun. (d) is unit pricing, which pays measured quantities rather than actual cost. (a) describes a developer's profit split rather than a construction contract; a contractor paid only when the project sells is financing the owner, and on residential work B&P §7159.5(a)(4)-(5) requires a payment schedule tied to the work as it is actually performed.

A guaranteed maximum price is cost-plus with a ceiling: the contractor bills documented cost plus its fee, the owner sees the books, and the owner never pays more than the guaranteed maximum however the cost runs. Savings below the cap are usually shared on an agreed split. (a) removes the mechanism that makes it work — a GMP without open-book cost tracking is a lump sum with extra paperwork, because neither party can tell where the cost stands against the cap. (c) inverts whose protection it is: the contractor's fee is what is at risk above the cap, and that pressure is the point of the structure. (b) confuses two pricing methods; unit pricing measures quantities, and nothing turns one into the other at completion.

Unit pricing answers 'how much per cubic yard?' and leaves 'how many cubic yards?' to be measured as the work is done — exactly right for excavation, grading, paving and undergrounding, where the quantity is not knowable until the ground is open. The owner carries quantity risk; the contractor carries productivity risk. (c) states the condition for a LUMP SUM: where scope and quantities are fixed, one price is cheaper to administer because nobody has to measure anything. (a) is lump sum again, from the owner's side. (b) is time and materials, which pays hours rather than quantities in place and so removes the contractor's incentive to work efficiently. Note that on residential work B&P §7159(d)(5) still requires a contract amount in dollars and cents, so a unit-price home improvement contract must state a total.

A time-and-materials contract prices inputs: hours actually worked at a rate the contract sets, plus materials at cost, usually with a stated markup. That is why the record-keeping carries the whole risk, and why B&P §7159.10(e)(7) requires a service-and-repair contract estimated this way to disclose the set rate, the estimated cost of materials, how time will be computed — in quarter hours, half hours or hours — and the statement that the actual amount may not exceed the estimate without the buyer's written authorization. (c) is a lump-sum contract, where the contractor carries the cost risk instead. (a) is a unit-price contract, which prices measured quantities, not hours. (b) describes a guaranteed maximum price with the open-book cost accounting removed, and a GMP without cost tracking is a lump sum wearing the wrong name.

A fixed-price or lump-sum contract puts the greatest cost-overrun risk on the contractor because the price is set regardless of actual costs; if costs exceed the estimate, the contractor absorbs the loss. Cost-plus and time-and-materials arrangements shift much of that risk to the owner, who reimburses actual costs. This is why accurate estimating and scope control are critical to profitability on fixed-price work.

Civil Code §1671(b) makes a liquidated damages clause in a non-consumer contract valid unless the party attacking it shows it was unreasonable under the circumstances existing when the contract was made — so the figure has to have been a genuine forecast of a loss that would be hard to measure, most often the owner's daily cost of not having the building. (a) is the other side of that same line: a sum set to punish rather than to estimate is a penalty, and a penalty is unenforceable whatever the contract calls it. (d) is a waiver-of-damages clause, a different animal. (c) plays on the word — 'liquidated' here means fixed in amount, not turned into cash. Note that §1671(c)-(d) reverses the presumption for consumer contracts and residential leases, where such a provision is void unless it was impracticable or extremely difficult to fix the actual damage.

Civil Code §1671(b) makes a liquidated damages clause in a non-consumer contract valid 'unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made'. The test looks at formation, not hindsight, and the usual showing is that the harm was hard to estimate and the figure was a genuine forecast of it. (c) reverses the doctrine: liquidated damages exist BECAUSE actual damages are hard to calculate; where they are easy, the clause has no work to do. (d) describes a penalty, unenforceable however it is labelled — a sum set to punish rather than to estimate. (a) adds a formality the statute does not require; note that §1671(c)-(d) flips the burden for consumer contracts and residential leases, where the clause is void unless it was impracticable or extremely difficult to fix the actual damage.

That is what a liquidated damages clause does: once it is valid under Civil Code §1671(b), the stated rate replaces proof of loss and the owner simply multiplies the rate by the days. (d) describes the position WITHOUT such a clause, where the owner must prove the delay cost him something — and the whole purpose of liquidating damages is that the loss was hard to estimate when the contract was made. (a) misreads the clause as a cap rather than a daily rate. (c) turns it into a penalty, and a sum set to punish rather than to estimate is unenforceable however it is labelled. The contractor's defences all survive: he can still contest whether the delay was excusable, whether substantial completion had already occurred, and whether the rate was unreasonable at formation.

'Time is of the essence' converts the completion date from a term whose breach yields damages into a condition whose breach can justify terminating the contract. Without the clause, late performance is ordinarily a partial breach compensated in money; with it, the delay itself can be material. It cuts both ways, since the owner's duties to give access, answer submittals and pay on time become time-critical too. (b) is the default the clause exists to displace — which is exactly why an owner who wants a hard date has to say so. (a) invents a one-sided reading; a clause in the contract binds both parties. (d) is no deadline at all, and would make the completion date the contract is required to state meaningless.

When a contract does not specify a completion date or make time essential, the law implies that performance must occur within a reasonable time given the nature and circumstances of the work. The contractor cannot delay indefinitely, but a minor delay is not automatically a material breach. There is no automatic 30-day rule, and completion is generally not conditioned on receiving full payment in advance.

A force majeure clause allocates the risk of extraordinary events outside either party's reasonable control — a declared disaster, war, a government shutdown order, sometimes named weather thresholds — usually by excusing the delay and extending the time for performance instead of treating it as a breach. Read the clause closely: most give TIME but not MONEY. (a) is the compensable-delay or delay-damages provision, which decides whether the extension comes with extended overhead; whether a delay is excused and whether it is paid for are two different questions, and confusing them is the expensive mistake. (b) invents a profit cap; California does not limit a private contractor's margin. (c) is a forum selection or arbitration clause.

In binding arbitration the parties hand a private neutral the power to decide, and the award is final and enforceable, reviewable only on the narrow grounds in Code of Civil Procedure §1286.2 — corruption, fraud, an arbitrator exceeding his powers. On residential property of four or fewer units, B&P §7191 governs how the clause must be titled, set and separately initialed before it binds the owner. (b) describes non-binding arbitration or a mediator's proposal, where each party keeps the right to walk away; the word 'binding' is the entire difference. (c) describes negotiation, which has no neutral decision-maker. (a) describes a court bench trial, which is public and appealable — precisely what an arbitration clause gives up.

A mediator has no power to decide. He carries offers, tests each side's case and tries to produce an agreement the parties sign; short of that agreement the dispute is exactly where it was. An arbitrator is given the power to decide, and the award is enforceable with only the narrow review in Code of Civil Procedure §1286.2. (b) is the confusion that matters, and it is the reason B&P §7191 imposes the special title, the 10-point boldface and the separate initials on ARBITRATION provisions and not on mediation clauses — arbitration waives a court or jury trial, mediation waives nothing. (c) describes litigation. (a) invents a public-works limit; mediation is used constantly on private work.

When parties agree to a valid, enforceable arbitration clause, a party who is sued in court may move to compel arbitration and to stay (pause) the lawsuit, enforcing the agreed forum. Courts generally favor honoring arbitration agreements. The clause is not automatically void, the dispute is a civil contract matter rather than a criminal one, and an arbitration clause does not transform the case into a public works claim.

Arbitration is often chosen because it can be quicker, more private, and less formal and expensive than a court trial, and the parties can select an arbitrator with industry knowledge. It does not guarantee a larger award, does not remove the need for a contract, and in fact typically offers very limited appeal rights, since finality is one of its features. Speed, privacy, and flexibility are its recognized benefits.

An assignment moves a RIGHT — most often the right to be paid — from the assignor to an assignee, who then stands in the assignor's shoes against the obligor. (d) is delegation, the mirror image: it moves the DUTY to perform, and crucially it does NOT release the delegating party, who stays liable if the delegate fails. Only a novation, agreed to by everyone, releases him. Assignment of construction receivables is routine, which is why contracts so often add an anti-assignment clause, while delegation of the work itself is usually restricted much harder. (b) describes rescission or mutual release. (c) describes an amendment and has nothing to do with transferring anything.

Delegating performance to a subcontractor does not, by itself, relieve the general contractor of its obligations to the owner. The prime contractor remains responsible to the owner for the entire scope, including the subcontracted plumbing, unless the owner agrees to a novation releasing the general. The general's continuing responsibility is independent of whether the sub is licensed, and delegation does not forfeit the general's right to payment for completed work.

Delegation is presumed allowed — Civil Code §1457 lets the burden of an obligation be transferred, and a contract is ordinarily indifferent to which crew hauls the debris. The exception is a duty the obligee bargained for BECAUSE of who would perform it: a muralist, a designer whose taste was the point, a contractor chosen for a skill nobody else on the list has. (a), (b) and (d) are the standard examples on the other side of the line — fungible delivery, fungible labour, and money, which is the most delegable obligation there is. One caution survives either way: delegation does not release the delegating party. He stays liable if the delegate fails, unless everyone agrees to a novation under Civil Code §1530.

A novation substitutes a new obligation, or a new party, for an existing one with the consent of every party, extinguishing the old contract and releasing the original obligor (Civil Code §1530-§1532). (b) is the distinction that matters on a job site: an assignment or delegation moves the benefit or the work, but the original party stays liable if the substitute fails — only a novation releases him, and only if the obligee agrees. (a) is a modification; the same parties remain bound to the same contract. (d) is a unilateral demand, which changes nothing without the other side's assent.

Civil Code §1457 allows the burden of an obligation to be transferred, and contract rights are generally assignable — but the parties may agree otherwise, and construction subcontracts routinely do, because the general contractor chose that subcontractor for a reason. An assignment made in breach of an express anti-assignment clause is at best ineffective and at worst a breach the general may terminate on. (d) states the default as though it were absolute, ignoring the clause the parties actually wrote. (c) confuses assignment with novation: a novation needs everyone's consent and substitutes a new obligation (Civil Code §1530), and it is the one thing that would release the original subcontractor — which is exactly what an unapproved assignment cannot do. (b) drags in the owner, who is not a party to the subcontract.

Code of Civil Procedure §1856(a) bars evidence of a prior agreement or a contemporaneous oral agreement offered to contradict the terms of a writing the parties intended as a final expression of their agreement. Everything the distractors describe falls outside that bar. (a) §1856(g) preserves evidence of fraud, mistake, illegality and other grounds attacking the validity of the agreement itself. (b) §1856(c) allows course of dealing, course of performance and usage of trade to explain or supplement the terms. (d) the rule reaches prior and contemporaneous agreements only; a LATER modification is governed by Civil Code §1698. The rule is far narrower than candidates assume, which is why three of these four look plausible.

The parol evidence rule has recognized exceptions: outside evidence may be admitted to show fraud, duress, mistake, illegality, or lack of consideration, to clarify an ambiguity, or to prove a separate collateral agreement. Proving that the contract was induced by fraud is a classic exception. The rule still bars using outside statements merely to contradict clear integrated terms, to rewrite the price out of regret, or to insert forgotten terms.

A clause declaring that the written document is the complete and final agreement is an integration or merger clause. It signals the parties intended the writing to be fully integrated, strengthening application of the parol evidence rule to exclude prior or contemporaneous outside promises. It is not a force majeure clause (uncontrollable events), a liquidated damages clause (pre-set damages), or an arbitration clause (dispute forum); its function is to establish finality of the writing.

Termination for cause rests on the other side's default — abandonment, persistent failure to supply labour or materials, refusal to correct defective work — and it normally requires written notice and a cure period before the contract may be ended. The consequence is the point: a party terminated for cause is charged with the cost of completing the work, while a party terminated for convenience is paid for what it performed. (a) is termination for CONVENIENCE, the no-fault route, and dressing it up as 'for cause' is how owners try to avoid that payment. (b) is the contractor's own breach seen from the wrong side; it may give the OWNER cause, but it is not a reason the contractor may terminate. (c) is an excusable-delay question, handled by a time extension under the weather or force majeure clause, not by ending the contract.

A termination for convenience clause lets the owner end the contract for its own reasons — the project is shelved, the financing falls through — without alleging any breach. The price of that right is payment: the contractor is generally made whole for work performed, materials ordered and defined close-out costs, though usually NOT the anticipated profit on work never performed, which is the practical difference between convenience and default termination. (a) describes termination for cause, the clause an owner uses when it wants to charge the contractor with completion costs. (c) is what an owner would like the clause to mean, but read that way it would be illusory — the owner could take the work and cancel the duty to pay. (d) describes a time extension, not a termination right at all.

Contractual duties are discharged by events such as complete performance, mutual rescission, accord and satisfaction, novation, or supervening impossibility or impracticability. A party's private, unexpressed change of mind does not discharge the contract; obligations remain until a recognized legal ground ends them. Merely wishing to be free of the deal, without agreement or a legal excuse, leaves the party bound and exposed to breach liability.

A contract claim is measured by the benefit of the bargain — economic loss — and Civil Code §3294(a) allows punitive damages only 'in an action for the breach of an obligation not arising from contract'. A tort such as negligence or fraud is a wrong independent of the promise and can reach personal injury, damage to other property, and, on clear and convincing proof of malice, oppression or fraud, punitive damages. (b) is the misconception the distinction exists to correct: no amount of bad faith converts a contract claim into a punitive one; the plaintiff must plead an independent tort. (a) invents a forum rule — both are legal claims tried to a jury unless the parties agreed to arbitrate or the relief sought is equitable. (c) overreads the economic loss rule, which limits tort recovery for the damage a defect does to the work itself; it does not immunize a contractor from negligence claims for injury to persons or other property.

A duty not to negligently harm others exists independently of any contract; when the contractor's carelessness damages a third party's property, the injured neighbor's claim arises in tort, specifically negligence, not breach of contract, because there is no contract between them. The Statute of Frauds and parol evidence rule concern contract formation and interpretation, not liability for negligently caused property damage.

Civil Code §3294(a) allows exemplary damages only 'in an action for the breach of an obligation not arising from contract', and only on clear and convincing evidence of oppression, fraud or malice — so a plaintiff who wants them must plead an independent tort such as fraud, not a badly behaved breach. (d) is the everyday misconception: even a deliberate, profitable breach is compensated, not punished. (c) confuses the forum with the theory; a jury does not enlarge what the law makes recoverable. (b) collapses two opposite ideas — liquidated damages are a compensatory estimate agreed in advance, and a liquidated sum set high enough to punish is void as a penalty under Civil Code §1671.

A written contract is evidence: it fixes what was promised, for how much, and on what schedule, so a later dispute turns on a document rather than on two recollections. On home improvement work it is also the precondition to being paid for changes at all, since B&P §7159(d) requires the writing and §7159(e)(3) makes unsigned extras unenforceable against the buyer. (a) overstates it — a writing improves your proof, it does not decide the case, and a contractor who breaches a clear contract simply loses faster. (c) inverts the effect: a writing usually CREATES express warranties rather than removing implied ones, and Civil Code §1668 limits what can be disclaimed at all. (d) confuses the writing with the licence; B&P §7031 bars the action for compensation however well the contract is drafted.

B&P §7031(a) bars any action in law or equity to collect compensation for work requiring a license unless the plaintiff was duly licensed at all times during performance, and it applies 'regardless of the merits of the cause of action'. §7031(b) goes further: a person who used an unlicensed contractor may recover ALL compensation paid for that work. (a) is what the contractor hopes — acceptance of the work, or the owner's knowledge that he was unlicensed, cures nothing. (c) invents a fixed multiple; §7031(b) is disgorgement of what was actually paid, which on a large job exceeds any double-the-price formula, while B&P §7028 makes unlicensed contracting itself a misdemeanor. (d) inverts the effect: losing the ability to bring or maintain an action takes the arbitration with it.

B&P §7031(a) bars any action for compensation unless the plaintiff was 'a duly licensed contractor at all times during the performance of that act or contract'; the test is continuous licensure across the whole job, and §7031(e) permits substantial compliance only on a narrow showing. (b) is the trap: a license valid on signing day but lapsed, expired or suspended mid-job forfeits the claim for the ENTIRE contract, not merely the unlicensed stretch. (c) is worse than wrong — §7031(b) lets an owner recover all compensation already paid to an unlicensed contractor, so acceptance waives nothing. (d) treats licensure as a discipline matter only; §7031 is its civil consequence, and it is the harshest provision in the chapter.

A condition precedent is an event that must occur before a party becomes obligated to perform. For example, a subcontract may state that the general contractor's duty to pay the sub is conditioned on the general first receiving payment from the owner. Until the condition is satisfied (or excused), the conditioned duty does not arise. It is not an automatic voiding term, a damages clause, or an arbitration provision.

A pay-if-paid clause seeks to make the owner's payment to the general contractor a condition precedent to the general's duty to pay the subcontractor, so that if the owner never pays, the general arguably owes the sub nothing. Such clauses are strictly construed and, in some jurisdictions and circumstances, limited by law or public policy. It is not a 24-hour payment guarantee, is not merely a lien waiver, and does not eliminate the need for a subcontract.

California implies into every contract a covenant that neither party will do anything to injure the other's right to receive the benefits of the agreement. Its work is policing discretion the contract grants — an owner who withholds approvals to run the clock, a contractor who staffs a job too thinly to meet dates it agreed to. (d) is the usual overreach: the covenant protects the agreed bargain; it imposes no duty to advance the other side's profit, and it never adds a term the parties did not agree to. (b) invents an ongoing duty to renegotiate, which is the same error in a different form. (a) confuses an implied duty with a required clause — arbitration is voluntary, as the notice B&P §7191(b) prescribes says in terms.