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CSLB Contract Requirements & Execution Practice Questions

This chapter walks through the full life of a job — from preparing a competitive bid, to estimating and controlling costs, to drafting a legally compliant contract, billing, and closing out. California writes very specific rules into contractor contracts, especially for residential work, and the exam tests the exact numbers and deadlines.

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Sample Contract Requirements & Execution questions

1. Under California law, a home improvement contract is required for residential work when the total contract price (labor AND materials) is at least:

✓ $500

California requires a written home improvement contract for any work on a residential property totaling $500 or more, including both labor and materials.

Bus. & Prof. Code §7159

2. A homeowner can cancel a home improvement contract that was solicited at their home within:

✓ 3 business days

The three-day right of rescission applies to contracts solicited and signed at the consumer's home. The homeowner has until midnight of the third business day to cancel without penalty.

Bus. & Prof. Code §7159(b)

3. Which of the following MUST be included in a California home improvement contract?

✓ Contractor's license number and expiration date

California law requires home improvement contracts to include the contractor's name, address, license number and expiration date, description of work, project start and completion dates, and payment schedule.

Bus. & Prof. Code §7159

4. A contractor and homeowner agree to change the scope of work during a project. This agreement must be:

✓ Written and signed by both parties before work begins

All changes to a home improvement contract must be documented in a written change order signed by both the contractor and homeowner before the changed work begins.

Bus. & Prof. Code §7159(d)

5. A contractor may demand final payment from the homeowner:

✓ Upon substantial completion of the project

A contractor may not demand or accept final payment until the project is substantially complete. Demanding payment before this point is a violation of California Contractors' Law.

Bus. & Prof. Code §7159

6. Which statement about arbitration clauses in construction contracts is TRUE?

✓ They can be included but must be clear and conspicuous

Arbitration clauses are permitted in construction contracts but must be clearly disclosed, written in at least 10-point boldface type in home improvement contracts, and separately initialed by the homeowner.

Bus. & Prof. Code §7191

7. A contractor abandons a job without justification after receiving a substantial deposit. The contractor may face:

✓ License suspension or revocation and criminal charges

Abandonment without legal excuse exposes a contractor to license discipline (suspension/revocation), civil liability for breach of contract, and potentially criminal charges for misappropriation of funds.

Bus. & Prof. Code §7107

8. Who is primarily responsible for obtaining building permits on a construction project?

✓ The prime contractor

While permits can technically be pulled by the owner, it is the contractor's professional responsibility to ensure all required permits are obtained before work begins. Working without required permits is a license violation.

Bus. & Prof. Code §7090

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