Contracts & ExecutionQuestion 542 of 690
A commercial construction contract has a liquidated damages clause of $2,500 per day for late completion. Under Civil Code §1671(b), this clause is presumed:
a.Valid unless the party seeking to invalidate it proves the amount is unreasonable under circumstances existing at contract formation
b.Void as a penalty unless equal to actual daily damages
c.Valid only if it appears in 14-point bold type
d.Void unless approved in advance by the CSLB
Explanation
Civil Code §1671(b) presumes liquidated damages clauses in non-consumer contracts to be valid; the burden is on the party challenging them to prove unreasonableness measured as of the time of contracting. Consumer contracts under §1671(d) are treated more strictly.
Law Reference: Civ. Code §1671Practice all 690 questions free — no signup required.
Related questions on this topic
- A home-improvement contract has a total contract price of $48,000. Under B&P §7159(d), the MAXIMUM down payment the contractor may demand or accept before any work or material delivery is:
- A consumer signs a home-solicitation contract for solar panel installation at her residence on a Tuesday at 6 PM. Under Civil Code §1689.5 et seq., she may cancel without penalty until midnight on:
- A contractor wishes to collect progress payments on a home-improvement contract. Under B&P §7159.5, each progress payment must:
- A residential construction contract over $500 contains a mandatory arbitration clause. Under B&P §7191, that clause must:
- A homeowner contracts with a Class B contractor to build a new single-family home for $425,000. Under B&P §7164 (residential new construction), the contract MUST include:
- A new single-family home built in 2022 develops water intrusion at exterior windows in 2025. Under Civil Code §896 (SB 800 / Right to Repair Act), the homeowner's PRIMARY remedy is:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California CSLB Contractor License Law & Business Exam · How we review