Business FinancesQuestion 1611 of 1632
A contractor signs two home improvement contracts on the same morning: one for $7,500 and one for $62,000. What is the largest down payment the contractor may lawfully demand on each job?
a.$750 on the $7,500 job, and $1,000 on the $62,000 job
b.$1,000 on the $7,500 job, and $6,200 on the $62,000 job
c.$750 on the $7,500 job, and $6,200 on the $62,000 job
d.$1,000 on each job, because that is the fixed statutory ceiling
Explanation
The cap is $1,000 or 10 percent of the contract amount, whichever is LESS, so the test has to be run separately on each contract. On the $7,500 job, 10 percent is $750, which is less than $1,000, so $750 is the ceiling. On the $62,000 job, 10 percent is $6,200, so the $1,000 figure is the smaller of the two and it binds. On a small contract the percentage governs; on a large one the dollar figure does.
Law Reference: Bus. & Prof. Code §7159.5(a)(3)This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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